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Robust economic recovery in East Asia, says WB

In Uncategorized on October 20, 2010 at 11:03 am

The economic recovery in Vietnam in particular and in East Asia and the Pacific in general is robust, said the World Bank in its latest East Asia and Pacific Economic Update.

The WB Update was announced at a press briefing in Hanoi on Oct. 19.

According to the Update, Vietnam ’s economy has recovered strongly with a GDP growth of 5.3 percent in 2009 and is on the way to the target of 6.5 percent this year. The nation’s foreign investment rose from USD6.9 billion in 2009 to USD7.6 billion in 2010.

In addition, manufacturing companies’ relocation of plants in Southeast Asia is benefiting Vietnam as its workers’ salaries are low and its sea-bordered position is favorable for attracting investment capital.

The Update notes that output has recovered to above pre-crisis levels throughout developing East Asia, and is expanding at near pre-crisis rates in some countries.

Real GDP growth is likely to rise to 8.9 percent in the region in 2010 (6.7 percent excluding China), up from 7.3 percent in 2009 and in line with the average growth rate during the 2000-2008 period. Private sector investment is once again driving growth, confidence is on the rise, and trade flows have returned to pre-crisis levels.

Yet, greater confidence in the region’s growth prospects and concerns about tepid economic expansion in advanced economies is creating the need for policymakers to perform a delicate balancing act — in particular, around the return of large capital inflows and appreciating currencies.

“Should inflows remain strong, especially against a background of weak global growth, the authorities will be faced with the challenge of balancing the need for large capital inflows — especially foreign direct investment — with ensuring competitiveness, financial sector stability, and low inflation,” said Vikram Nehru, World Bank chief economist for the East Asia and Pacific region.

The East Asia and Pacific Update which is published twice yearly is the WB’s comprehensive review of the region’s economies.

Source: SGGP

ADB forecasts ‘robust recovery’ for developing Asia

In Uncategorized on April 13, 2010 at 9:35 am

Developing Asia’s economies were on track for a “robust recovery”, the Asian Development Bank (ADB) said Tuesday, with India and China working as the engines of growth.

However, it warned that the region could still be at risk if stimulus measures introduced to counter the global downturn were removed too soon or if the world economy suffered any further jolts.

The bank said developing Asia would grow 7.5 percent this year — outpacing the 5.2 percent seen in 2009 — although this would slow slightly to 7.3 percent in 2011.

The forecast is still below the region’s record 9.6 percent expansion seen in 2007.

“Developing Asia’s recovery has taken firm hold and a return to stronger and sustainable growth is now in sight if the region can meet the challenge of strengthening domestic demand,” said ADB Chief Economist Jong-Wha Lee.

The region’s prospects improved after better-than-expected growth in the second half of 2009, a boost driven by the “strong performances” of the Chinese and Indian economies, the bank said.

“(The region) can look ahead to a robust recovery in the next two years,” the bank said.

Fiscal stimulus measures designed to counter the global financial meltdown will likely continue to lure foreign investment, while rising incomes and lower unemployment should get consumers spending more, it added.

That spending will likely boost inflation to about four percent this year and again in 2011, up from 1.5 percent in 2009, the bank said.

However it said: “There is concern that as stimulus measures are unwound, particularly in the major economies, the strength of private demand is not healthy enough to take over.”

Lee told a press conference in Hong Kong that appreciation of the Chinese yuan could support the stability of the region’s economy and curb inflationary pressure.

“Maybe this is the right time to increase the exchange rate (of the yuan). Increasing the exchange rate flexibility will not only help China, but also the region as a whole,” he said.

The bank is also concerned that the region’s early recovery is “already attracting potentially volatile capital flows, complicating macroeconomic management.”

“We are concerned that the increase in asset prices in Hong Kong and China will spread to other countries in the region. That will be very risky,” Lee said.

Rising food prices, which disproportionately affect the poor, also pose a risk, the ADB said.

The report warned that government policy makers must steer their countries through an uncertain environment with a “timely return to sound and responsible fiscal and monetary policies“.

“These served the region well when the crisis broke, and authorities need to adapt them appropriately as recovery takes hold and the crisis recedes,” it said.

East Asia — including Hong Kong, China, Korea, and Taiwan — is forecast to lead the region with an 8.3 percent rise in gross domestic product in 2010, up from 5.9 percent in 2009, the report said.

Southeast Asian economies will grow 5.1 percent this year, from 1.2 percent in 2009, as countries including Thailand, Cambodia, and Malaysia see an upswing in exports, the bank said.

India will lead South Asia‘s 7.4 percent GDP increase this year, the bank said, up from a 6.5 percent rise in 2009.

Central Asia, including Kazakhstan and Georgia, will see 4.7 percent economic growth compared with 2.7 percent last year, the bank said.

Pacific island nations, including Fiji and Papua New Guinea, are expected to see their economies expand 3.7 percent in 2010, outpacing a 2.3 percent rise last year, the report said.

The Manila-based lender’s annual report looks at 44 jurisdictions stretching from the former Soviet states of Central Asia to some Pacific islands, but excludes developed countries such as Japan, Australia and New Zealand.

Source: SGGP

ADB: VN needs to stabilise economy for robust 2010-2011

In Uncategorized on September 16, 2008 at 9:37 am

The Asian Development Bank (ADB) said on September 16 that Vietnam needs to continue measures to stabilise its economy, even to slow growth in 2009 to be better prepared to resume strong economic growth in 2010-2011.

This was announced following concerns that Vietnam may be tempted to loosen its fiscal and monetary policies and boost public investment in an effort to spur the economic growth rate again as price pressures are projected to ease, along with a slowdown in growth and a narrower trade deficit.

“It should be clearly realised that there is a trade-off between the growth target for next year and the growth potential for ensuing years. Vietnam should be patient in shifting its policies towards economic recovery,” ADB Country Director for Vietnam Ayumi Konishi said at the launch of the Asian Development Outlook 2008 Update (ADO Update).

He added that targeting a lower growth rate of 6% next year, as compared to the projected 2008 growth of 6.5%, will provide more solid foundation for economic growth in 2010 onwards. However, he warned that although there have been the improvement in economic statistics in recent months, “in absolute terms, inflation and the trade deficit are still very high and it will still take some more time to firmly stalibise the situation.”

According to the ADO Update, inflation rates in 2008 and 2009 are estimated at 25 percent and 17,5 percent, respectively, while the current account deficit for this year is now seen at 13.5 percent of GDP and for 2009, 7 percent GDP.

The report noted that the State Bank of Vietnam needs to continue strenthening its prudential supervision of banks and – should any bank become financially distressed – act swiftly to prevent a systemic banking crisis.

Besides, efforts should be made to overcome challenges such as lack of availability of timely key data, temptation to loosen monetary and fiscal policies prematurely and weakness in capital absorptive capacity, said Economist, Governance and Public Sector Reform Officer of ADB Dao Viet Dung.
Despite near-term risks and challenges, “we strongly believe that Vietnam’s medium to long-term economic prospects remain good” with moderate external debt burden, rising foreign direct investment (FDI) inflow, and significant growth potential, ADB Country Director Ayumi Konishi said. –