Contacts:
In Phnom Penh:
Bou Saroeun sbou@worldbank.org
In Bangkok:
Kimberly Versak Email : kversak@worldbank.org
Phnom Penh , November 3, 2005 – Emerging East Asia grew at just over 6 percent in 2005 as the region’s economies countered a series of threats, including rising oil prices and interest rates, the high-tech slowdown, and the end of preferential export quotas for garments, according to the World Bank's latest East Asia Update released today at http://www.worldbank.org/eapupdate Avian flu, which is endemic in the poultry flocks of many East Asian countries, is a growing concern, however, for regional economies as the disease spreads among birds and as health experts look for signs of human-to-human transmission. The latest edition of the World Bank's twice-yearly economic survey of East Asia and the Pacific shows growth in the region moderating from 2004’s exceptionally strong rate of 7.2 percent. Japan is showing signs a robust economic recovery, and China’s GDP, which has continued to grow at more than 9 percent this year, is expected to slow only modestly next year to just under 9 percent. “Economies in the region have adjusted well to some fairly serious shocks since the end of 2003, not least of which was the doubling of global oil prices,” said Jamil Kassum, Vice President, East Asia and Pacific Region. Indonesia, for example, which cut fuel price subsidies, adopted bold measures to soften the impact on the poorest through a new cash transfer program and increased health, education and infrastructure spending. “These adjustments, including Indonesia’s move to cut fuel subsidies and offset effects on the poorest, may have slightly lessened the recovery in domestic consumption, but, in the longer-term, they are putting economies on much more solid footing,” said Homi Kharas, Chief Economist of the East Asia and Pacific Region. Indonesia’s move also shows the increasing importance for governments to take into account the social impacts of policy changes, particularly on the poorest members of society. Poverty continues to fall in most parts of East Asia with the number of people living on less than $2 a day falling by 37 million to just less than 32 percent in 2005, which is down from 50 percent in 1996. Cambodia According to Rob Taliercio, Senior Country Economist for Cambodia “It is encouraging that during 2005, Cambodia has followed the pattern of other East Asian economies and is expected to grow at around 6 percent despite the unfavorable external shocks that it has experienced. Cambodia’s economic prospects for 2005 have improved considerably, mostly as a consequence of continued though slower (as compared with prior years) growth in garment exports, in part due to the imposition of restrictions on Chinese textile imports in the US and EU markets. But part of the success is also due to the prudent monetary and fiscal policies that the Government has adopted, and also due to some acceleration in the pace of structural reform as compared with 2004.” Nisha Agrawal, Country Manager for Cambodia added that “During the last decade (1994-2004), Cambodia has had high growth rates averaging 7.1% per annum. New data reported in the draft National Strategic Development Plan (NSDP) for 2006-2010 currently under preparation show that this growth has also translated into poverty reduction and improved welfare. Based on an assessment of the new Cambodia Socio-Economic Survey (CSES), it is estimated that the poverty rate had come down from around 47% in 1993/94 to 35% today. These gains have been largely due to the peace dividend and due to the strategy of global (joining WTO) and regional integration (joining ASEAN) that Cambodia has pursued aggressively. To sustain these gains in the coming decade, however, Cambodia can no longer rely on the old strategies but will instead need to rely much more on implementing a reform program to tackle the governance challenges that it now faces.” Avian flu
On a more sobering note, the report notes that avian flu is now endemic in the poultry flocks of many countries in the region and indeed has spread to Europe and central Asia. “While the costs of dealing with this have so far been limited to around 0.1 percent of GDP, from culling birds and implementation of better animal health surveillance systems, the potential impact of a serious pandemic is of grave concern,” said Milan Brahmbhatt, lead economist and main author of the report.
“Dealing with the influenza threat requires top political priority in an approach that brings together agriculture, animal health, human health, and finance, along with the best technical help from international agencies who are mobilizing to support country initiatives,” Mr. Brahmbhatt added. Country representatives and international agencies, including The World Health Organization, the Food and Agriculture Organization, the World Organisation for Animal Health, and the World Bank, will be meeting in Geneva November 7 through 9 to strengthen global coordination and assess national plans, focusing on affected and at-risk countries.
Trade
Another positive development has been the way in which trade in garments has evolved, after the phase out of the Agreement on Textiles and Clothing in January, which offered preferential treatment for some exporters. Fears were that some of the poorest exporters in the region would lose out completely as China gained free access to major markets. But, in fact, poor countries like Cambodia and Lao PDR have been able to expand their market share of garment exports. The report, which includes a special focus section on trade ahead of the December World Trade Organization meeting in Hong Kong, also notes that East Asian economies have much to gain from liberalizing their services sector in addition to much-needed progress on the Doha Development Agenda. The East Asia Update is published online at http://www.worldbank.org/eapupdate, including the special focus section on Doha, country sections, and data tables. |
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