ECONOMIC GROWTH in East Asia and Pacific is robust, but the region needs to reduce its reliance on exports and find new sources of growth, the World Bank said in a report released last week.
Developing East Asia and Pacific grew 8.2 per cent in 2011, 4.3 per cent when China is excluded, a sharp decline from the nearly 10 per cent growth rate recorded in 2010, which amounts to 7 per cent excluding China.
“Some countries will need to stimulate household consumption. In others, enhanced investment, particularly in infrastructure, offers the potential to sustain growth provided this does not exacerbate domestic demand pressures,” said Bryce Quillin, World Bank economist and lead author of the report Capturing New Sources of Growth.
The region’s performance is still impressive on a global scale, ran the report.
In 2011, growth was about two percentage points higher than the developing country average worldwide, and poverty continued to fall, the global lender said.
“The number of people living on less than $2 (€1.60) a day is expected to decrease in 2012 by 24 million,” said Pamela Cox, World Bank East Asia and Pacific regional vice president. “Overall the number of people living in poverty has been cut in half in the last decade in East Asia and Pacific.
“Despite this success, about one-third of the people in the region, roughly half a billion men, women and children, still live in poverty. In an uncertain global environment, more needs to be done to create new sources of growth that provide opportunities for all.”
Growth last year was hit by the earthquake and tsunami in Japan and by the flooding in Thailand, the country’s worst in 70 years. For 2012, the report projects that annual growth will moderate further to 7.6 per cent with slower expansion in China pulling down the regional aggregate. Excluding China, growth will increase to 5.2 per cent as Thailand returns to normal levels of production.
“Most East Asian economies are well positioned to weather renewed volatility,” said Bert Hofman, World Bank chief economist for the East Asia and Pacific region. “Domestic demand has proved resilient to shocks. Many countries run current account surpluses and hold high levels of international reserves.
“Banking systems are generally well- capitalised. Still, risks emanating from Europe have the potential to affect the region through links in trade and finance.”
The EU, along with the US and Japan, accounts for more than 40 per cent of the region’s exports.
