The average economic growth of 18 key economies in the Pacific Ocean rim will slow down to 4.2 percent this year from 5.4 percent last year and risks could further affect their outlook, a regional think-tank said yesterday.
The Singapore-based Pacific Economic Cooperation Council (PECC), which brings together government officials, academics and businessmen, said in its forecast for this year and next is that trade and financial imbalances remained too high in the region.
"After a blistering economic expansion in 2004, the Asia Pacific region is poised for slower but still robust growth in 2005," PECC said.
"The traditional growth engines in the region -- the United States and Japan -- turned in very robust growth of 4.4 percent and 2.6 percent respectively, pulling along the rest of Asia Pacific," it said.
Last year also marked the confirmation of China as a new growth engine for the region, PECC said.
"In the course of the year, China overtook Japan as the second most important trading partner for many Asia-Pacific economies and also overtook the United States as Japan's most important trading partner," said Yuen Pau Woo, head of PECC's forecasting panel.
For next year, the region's 18 economies are projected to grow at 4.2 percent with trade and financial imbalances looming as threats to their economic growth prospects, PECC said.
The imbalances refer to the twin US budget and current account deficits, the accumulation of huge foreign currency reserves by Asian central banks and divergent growth rates in the world's major economies.
In particular, the US current account deficit is worrisome because the region's central banks have massive foreign reserves denominated mainly in the greenback.
"A sudden loss of confidence in the US dollar could lead to a disorderly decline in the value of the US currency, which could spill over into financial markets and the real economy," PECC said.
"Asian central banks play a key role because of the substantial foreign reserves that they hold in US dollar-denominated assets estimated at US$2 trillion in 2004," it said.
The US current account deficit is tipped to swell to a record US$755 billion or 6.1 percent of its GDP by the end of this year, PECC said.
The region's major economies led by the US are all poised for slower growth this year, the PECC report said. US economic growth will cool to 3.5 percent this year following a "record-breaking clip" of 4.4 percent last year.
China's growth this year is tipped at 8.5 percent from 9.5 percent last year with private consumption to emerge as a growing economic driver.
"Fears of a hard landing did not materialize in 2004. Rather, the economy has continued on its breakneck pace of expansion into the first-half of 2005," PECC said.
Japan's economy is projected to slow to 1.3 percent this year from 2.6 percent last year.
For Southeast Asia, "the outlook for 2005 is for slower growth throughout the region, in part due to excessive expansion in such areas as construction and consumer spending, and also due to the less buoyant external demand," PECC said.
Thailand's economy is expected to grow by 5 percent from 6.1 percent last year, Indonesia by 5.5 percent from 5.1 percent, Singapore by 4.7 percent from 8.4 percent, Malaysia by 5 percent from 7.1 percent, the Philippines by 5.7 percent from 6.1 percent, Vietnam by 8.5 percent from 7.7 percent, Hong Kong by to 4.7 percent from 8.3 percent last year and Taiwan by 4 percent from 5.7 percent.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
NOVEL METHODS: The PLA has adopted new approaches and recently conducted three combat readiness drills at night which included aircraft and ships, an official said Taiwan is monitoring China’s People’s Liberation Army (PLA) exercises for changes in their size or pattern as the nation prepares for president-elect William Lai’s (賴清德) inauguration on May 20, National Security Bureau (NSB) Director-General Tsai Ming-yen (蔡明彥) said yesterday. Tsai made the comment at a meeting of the Legislative Yuan’s Foreign Affairs and National Defense Committee, in response to Democratic Progressive Party (DPP) Legislator Wang Ting-yu’s (王定宇) questions. China continues to employ a carrot-and-stick approach, in which it applies pressure with “gray zone” tactics, while attempting to entice Taiwanese with perks, Tsai said. These actions aim to help Beijing look like it has
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
UNWAVERING: Paraguay remains steadfast in its support of Taiwan, but is facing growing pressure at home and abroad to switch recognition to Beijing, Pena said Paraguayan President Santiago Pena has pledged to continue enhancing cooperation with Taiwan, as he and Japanese Prime Minister Fumio Kishida expressed opposition to any unilateral change to the “status quo” in the Taiwan Strait using force, Japanese media reported on Saturday. Kishida yesterday completed a trip to France, Brazil and Paraguay, his first visit to South America since taking office in 2021. After the Japanese leader and Pena spoke for more than an hour on Friday, exchanging views on the situation in East Asia in the face of China’s increasing military pressure on Taiwan, they affirmed that “unilateral attempts to change the