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. Asia-Pacific Economic Growth Slows

High oil prices have impacted growth in the Asia and Pacific region.
by William M. Reilly
UPI U.N. Correspondent
United Nations (UPI) Mar 31, 2006
Growth in the Asia and Pacific region declined from 4 percent to 3.2 percent in 2005, according to figures from the U.N. Economic and Social Commission for Asia and the Pacific. The cause, according to the U.N. Economic and Social Commission for Asia and the Pacific is a softening in global trade, high oil prices, and one reason is because of its impact on inflation, and growing rural underemployment and unemployment concerns.

However, prospects for this year were positive.

The annual Economic and Social Survey of Asia and the Pacific for 2006, "Energizing the Global Economy" was released Thursday at U.N. World headquarters in New York and at the world organization's Asia headquarters in Bangkok and several other cities around the world.

The Economic and Social Survey of Asia and the Pacific 2006 analyses trends in the regional economy against the background of global developments and outlines the main policy issues facing the region. The 2006 Survey also considers unemployment in Asia and the Pacific and examines the actions that Governments can take to deal with the problem.

The slowdown in the global economy and in ESCAP developing countries was the result primarily of high and volatile oil prices and a softening of global trade, said a statement accompanying the report. More expensive oil also heightened inflation in the region; however, overall price pressures remained mild by historical standards.

"Prospects for 2006 indicate GDP growth should maintain its current momentum while price pressures abate slightly, the report said.

The region also faces the threat that avian influenza might develop into a pandemic.

"Other policy challenges facing the region are its fast but inequitable growth and the implementation of the multilateral trade liberalization agenda agreed at the Sixth World Trade Organization Ministerial Conference held in Hong Kong" in December 2005, said the statement.

The Asian and Pacific region, the report said, needs to address unemployment and underemployment.

The report said, notwithstanding the slight deceleration, "economic performance in 2005 was remarkable in view of an economic environment made increasingly adverse by high and volatile oil prices, widening current account imbalances and a softening of global trade. Growth in 2005 was driven essentially by the strong performance of China and the United States of America."

The moderately decelerated growth rate of ESCAP developing countries was, more specifically, characterized by "a cyclical downturn in the world's information and communication technology industry, in which many economies in the region enjoy considerable competitive strength."

The rise in oil and other commodity prices, however, increased the level of inflation in 2005 relative to 2004, although the increase in prices throughout the region remained mild by historical standards, the report said.

But the report was optimistic.

"The current momentum of output growth in the ESCAP region should continue in 2006 while price pressures are likely to abate despite continuing high energy and commodity prices," the report said.

East and North-East Asia achieved an impressive average economic growth rate of 6.8 percent in 2005, led by China which grew by 9.5 per cent in the year as a whole after having achieved double-digit growth in 2004.

Positive growth was recorded virtually across northern and central Asia in the first eight months of 2005, with Azerbaijan registering remarkable gross domestic product expansion of 20 per cent and Armenia of more than 11 per cent.

Lack of reliable data is a major constraint in reporting on the Pacific island countries.

Despite rising oil prices, countries in South Asia maintained their growth momentum in 2005. Aided by normal monsoon rains, the reforms and structural changes initiated earlier are now bearing fruit.

India is increasingly becoming a major contributor to global growth.

The economy of Pakistan grew strongly in 2005, supported by strong growth in large-scale manufacturing, especially in textiles, a sharp upturn in agriculture and a robust performance in the service sector, especially finance.

Both India and Pakistan are projected to maintain their current growth momentum in 2006 and beyond.

In Sri Lanka, recent growth momentum was maintained in 2005.

High energy prices continue to underpin the performance of the Islamic Republic of Iran.

The economy of Turkey slowed sharply in 2005 primarily in response to higher energy prices, which created significant uncertainty for both investors and households. Current trends are likely to continue in both countries in 2006.

Across the sub-region, macroeconomic stability is being maintained through budgetary

discipline and prudent monetary policy, although price pressures have re-emerged in Turkey.

Economic growth in the South-East Asia eased in 2005 after unusually good performance in 2004, when strong global demand for manufactures, especially electronics and ICT products, had driven growth. Economic growth is expected to accelerate in 2006, as the cyclical recovery of demand for semiconductors and ICT products gathers pace and is aided by continuing growth in Japan and the United States.

Within the sub-region, increased imports are forecast by Malaysia and Viet Nam, the region's net oil exporters, which will benefit from high oil prices.

Australia and New Zealand, GDP growth eased in 2005 compared with 2004 but remained close to its long-term trend, as strong export growth was partly offset by weaker domestic demand. A sharper decline in domestic demand and still buoyant imports in 2006 is likely to slow the New Zealand economy further.

Source: United Press International

Related Links
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China Tops East Asia with Most Growing Mid-size Companies
Hong Kong, China (SPX) Mar 16, 2006
Key findings of the Experian Grant Thornton International Business Owners Survey (IBOS) 2006 reveal that China (mainland China, Hong Kong and Taiwan) tops East Asia with most growing mid-size companies. Hong Kong ranks first in both East Asia and the world in having above average growing mid-size companies, for the 2nd year in succession. Over 82% of Hong Kong mid-size businesses recorded growth at above the global average this year. In East Asia, mainland China ranks 2nd and Taiwan ranks 4th (51%).

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