RTTNews - Emerging East Asian Economies had already entered the transition from recession to recovery, although the economic growth was continuing to slow this year, the Asia Development Bank said in its July issue of the Asia Economic Monitor on Thursday.
Emerging East Asia could see a V-shaped recovery, with growth dipping sharply in 2009 before regaining last year's pace in 2010, Jong-Wha Lee, ADB Chief Economist and Head of the Office of Regional Economic Integration said.
The ADB forecasts average growth of 3% in 2009 and 6% for 2010 for emerging East Asia. This compares with the 6.1% growth recorded in 2008.
China, Hong Kong, Taiwan, Singapore, South Korea, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Cambodia, Brunei, Laos and Myanmar are the emerging East Asian economies according to ADB norms.
However, the report cautioned saying that given the tentative nature of the expected recovery, it was critical for authorities to continue to follow measures which would support domestic demand and growth. Monetary and fiscal policies in the region need to remain accommodative until the recovery gains substantial traction, the ADB said.
Emerging East Asia should reinforce cooperation in enhancing financial stability by accelerating regional initiatives, and actively participate in designing the new global financial architecture, it added.
Moreover, the ADB pointed out that deep recessions in the U.S, Europe and Japan would continue to hurt emerging Easing Asian economies, particularly the smaller ones that were highly reliant on exports. However, larger economies like China, that had implemented major fiscal packages were beginning to see some results from the stimulus packages.
The U.S., Japan, and Europe remain major markets for Asian exporters. The ADB says before emerging East Asia can return to the levels of growth seen in recent years, industrialized economies must recover sufficiently to rekindle demand for the region's exports.
Trade within emerging East Asia has grown rapidly in recent years, but it remains largely based on parts and components rather than final goods, the ADB said. The region has yet to provide final demand for its own exports, it added. The region's external demand will not pick up soon due to the likelihood of a modest recovery in 2010 rather than a strong revival.
Until stimulus in advanced economies begins to gain traction and households realign their debt and savings profiles, it is unlikely that external demand will drive the region's export production back to full throttle any time soon.
The Manila-based bank noted that growth in China and Indonesia this year may top ADB's estimate. The bank forecast in March that China would grow 7% and Indonesia by 3.6%.
At the same time, the organization saw downside risks to the 2.5% growth forecast for the Philippines on expectations that remittances from Filipinos working overseas may not stay robust. The ADB also found downside risks to its outlook for Malaysia, Thailand and Taiwan.
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