East Asia to See Slower Growth in 2009: World Bank

East Asia to See Slower Growth in 2009: World Bank
(The Canadian Press – Tomoko A. Hosoka, Associated Press) Wednesday, December 10, 2008

East Asian economies are far better prepared to tackle the latest financial turmoil than they were during their own crisis a decade earlier, but they nonetheless face growing dangers as the global slump deepens, the World Bank said Wednesday.

The bank also praised "quick action'' by policy makers in the region to respond to the crisis, saying the moves should help East Asia stabilize global economic growth.

Amid falling exports and slowing business investment, real gross domestic product growth in East Asia – a region that includes China but excludes Japan – will slow to 5.3% in 2009 from an expected 7.0% this year, the bank said in a new regional report.

In contrast, the developed economies of the U.S., euro zone and Japan are all projected to contract.

East Asia will contribute about a third of total global growth in 2008, according to the World Bank.

“Thanks to the quick action of policy makers from virtually every East Asian country, banking systems have been able to deal with the crisis so far and in a number of countries, economic stimulus packages are being put in place,” said Jim Adams, World Bank vice president for the East Asia and Pacific region, in a statement. “These actions are helping East Asia continue to play a key stabilizing role and act as a growth pole for the global economy.”

The Asian financial crisis of 1997-98 helped strengthen the region over the last 10 years, the World Bank said. Public finances, external balances and corporate balance sheets are more sound thanks to smarter macroeconomic policies, tighter bank supervision and better risk management systems.

To better position themselves during the current crisis, Asian countries should work to maintain macroeconomic stability, shift exports to faster-growing regions, strengthen domestic demand, and continue structural reform efforts, the report said.

“Despite the difficult road ahead, those countries that sustain the sound policies pursued thus far and tackle new challenges decisively will be the ones to emerge in a strengthened position when the global economy begins to recover,” said Vikram Nehru, the World Bank's chief economist for East Asia and the Pacific.