The Asian Development Bank (ADB) yesterday slashed its growth forecast this year for Asia’s developing economies in light of plunging exports and warned that weak demand in the US and other markets could delay a recovery.
The bank cut its growth outlook for the region, which includes China, India, Taiwan, South Korea and Southeast Asia, to 3.4 percent from 5.6 percent. It said that while regional giants China and India should eke out modest growth, output in South Korea, Taiwan, Thailand, Malaysia and Singapore could shrink by up to 5 percent.
On the whole, Asia’s economic growth is expected to decelerate further this year before staging a mild recovery and rising 6 percent next year, Jong-Wha Lee, the Manila-based bank’s acting chief economist.
“The short-term outlook for the region is bleak as the full impact of the severe recession in industrialized economies is transmitted to emerging markets,” Lee said. “The concern for the region, and especially for the region’s poor, is that it is not yet clear that the US, European Union and Japan will recover as soon as next year.”
ADB’s downgrade was in line with the World Bank and private sector economists, who have cut Asian growth forecasts given sharp falls in exports and a slump in spending by Asia’s own consumers.
The downturn is Asia’s worst since the 1997 financial crisis and is being driven partly by the staggering collapse in Western demand for the electronics, cars and other exports that are critical to the region’s economic growth.
Lee said the region’s exporters would continue to struggle, but Asia’s governments were in a better position to respond to the global crisis thanks to their massive surpluses and had limited its impact by taking quick action.
“Large foreign currency reserves and steadily declining inflation rates will provide policymakers with the necessary tools to nurse their economies through the hard times ahead,” the ADB’s statement said.
China is trying to reduce reliance on exports with a 4 trillion yuan (US$586 billion) plan to pump money into the economy through public works spending. Singapore, Hong Kong, South Korea and other governments have announced similar stimulus measures.
Economies covered by the ADB report grew 6.3 percent last year and 9.5 percent in 2007.
The ADB said the slowdown highlights the dangers of Asia’s reliance on exports and said government must increase domestic demand and become more efficient. The region’s countries can do this by strengthening social safety nets that reduce the need to save.
Other measures include promoting smaller businesses and improving the local investment climate.
“This may be a crisis, but it is an opportunity to rebalance growth,” Lee said. “A more balanced approach can boost social welfare by using its savings more productively and help to reduce global imbalances that helped feed the current crisis.”
The Chinese economy is expected to rise 7 percent, down from 9 percent last year, while India’s growth is seen slowing to 5 percent from 7.1 percent last year, the bank said.
Taiwan is expected to shrink by 4 percent, while South Korea and Hong Kong are forecast to contract by 3 percent and 2 percent respectively, the bank said.
Southeast Asia is forecast to collectively grow just 0.7 percent this year, down from last year’s 4.3 percent, the bank said. But output in trade-driven Singapore will shrink by up to 5 percent, while that of Thailand and Malaysia should also contract.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique