Asia growth to hit 7%, bank says
(CNN) -- Developing Asia and the Pacific will grow at 7.0 percent in 2004 on strong exports and buoyant intraregional trade, the Asian Development Bank says.
That is equal to the fastest growth since the 1997-98 Asian financial crisis and is up from 6.5 percent last year.
ADB chief economist Ifzal Ali told CNN Thursday that growth in the region was now "much more balanced".
He said the combination of strong exports, a sharp increase in business investment and continuing robust domestic consumption was keeping Asia buoyant.
But he noted that by 2005, the impact of U.S. interest rate rises would flow through to Asia, and export demand among some of the region's key markets would ease as rates and the rise in oil prices began to be felt.
In an update released in Manila, the ADB said it was lifting its 2004 growth outlook slightly from 6.8 percent to 7.0 percent.
The ADB defines developing Asia and the Pacific as all of the region except the advanced economies of Japan, Australia and New Zealand.
It said in most countries, growth had become more broad based, with a fast expanding external sector and robust domestic demand.
It said business investment, which had been lagging since the Asian financial crisis, has revived due to higher capacity usage, surging export demand, low interest rates and recovering business confidence.
The ADB said that despite strong growth and higher oil prices, inflation remains "relatively subdued" and was projected at 3.7 percent this year for the region as a whole.
It predicted an easing of growth next year to 6.2 percent as this year's oil price pressures and interest rate rises begin to have an impact on the region.
It is projecting growth this year of 8.8 percent for China, 8.1 percent for Singapore, 7.5 percent for Hong Kong and Vietnam, 6.8 percent for Malaysia, but just 4.8 percent for Indonesia.
In South Asia, the ADB sees growth of 6.5 percent for India and 6.4 percent for Pakistan. One of the best performers in the Pacific is expected to be Fiji, with a growth outlook this year of 4.1 percent.
The ADB said risk to the outlook include imbalances in the United States, Japan and the European Union, which could start to drag down world growth as 2005 advances.
"High oil prices, if sustained into 2005, could result in a faster deceleration in growth of major industrial economies," it noted.
It said governments in Asia needed to consider increasing domestic consumption to support growth if external demand turned down.
