East Asia's economy is expected to grow by more than 6 percent in 2004, the strongest since the beginning of the global slowdown in early 2000. The region's economic recovery to levels before the 1997 financial crisis is being fueled by growing exports, low interest rates, and high investment in China, Vietnam, and Thailand.
By the end of 2003 low and middle-income countries in the region were growing at a combined rate of 7.6 percent, their fastest rate since 1996. This bodes well for the region's poor, with an estimated 49 million moving above the $2 a day line in this latest upsurge (see, "Special Focus: Scaling Up Poverty Reduction" 116KB.PDF).
In the current recovery, growth and poverty reduction are being shared more widely around the region. This is in part due to rising commodity prices, which are boosting incomes in several of the low-income, commodity-exporting countries. (see, "All Round Higher Commodity Demand" 327KB.PDF).
This recovery will likely increase growth in intra-regional production and trade networks, centered on China, which is taking in a growing number of its neighbors' exports. Long the driver of regional growth, China's imports surged 40 percent in 2003, and figures from the first quarter of 2004 show continued growth, fueled by demand for inputs to its manufactured exports, mostly from China's neighbors.
The Chinese authorities are working hard to slow the country's pace of growth to a more manageable level. To do this, they must balance the need to continue creating jobs and reforming the economy while slowing down excessive investment and maintaining stability. How this slow down will affect China's neighbors remains to be seen (see
"The Chinese Locomotive - How Much Longer?" 242KB.PDF).
News Release:
 East Asia on Solid Ground, Set to Grow by 6 Percent in 2004
Presentation:
by Homi Kharas, Chief Economist, and Milan Brahmbhatt, Lead Author
|
RSS