Rising Oil Prices to Cut East Asia Growth - ADB
Byline: EDU H. LOPEZ
Rising oil prices reaching record levels and the less favorable external environment would continue to put pressure on the projected moderate economic growth of East Asia.
The Asian Development Banks (ADB) Asia economic monitor (AEM) predicts East Asias gross domestic product (GDP) to grow by an average of 6.8 percent this year from 7.6 percent in 2004.
Excluding China, East Asia is expected to post average growth of 4.4 percent compared with 2004 growth of 5.5 percent.
China recorded GDP growth of 9.4 percent in the first quarter of 2005, and 9.5 percent in the second quarter.
A gradual softening of fixed investment, already underway, and somewhat diminished export prospects are expected to slow growth in the coming quarters, according to ADB. GDP growth for 2005 is forecast at 8.9 percent, down from 9.5 percent in 2004.
Singapore is likely to be among the economies hardest hit by the deteriorating external environment.
The island nations highly open economy will be adversely affected by weaker export prospects and slower export growth may affect consumer and business sentiments, thus affecting domestic demand, said ADB.
Singapores economy is expected to grow 3.7 percent in 2005, down from 8.4 percent in 2004.
These forecasts are subject to risks from further increases in oil prices and a disorderly adjustment of the global payments imbalance, the ADB report said.
"We now face a backdrop of moderately slowing growth, a gradual buildup of inflationary pressures, and a tightening of US monetary policy," says Pradumna B. …