Asian economic growth will ease slightly to just under 8 percent for the next two years as the region continues a solid recovery, the Asian Development Bank said Wednesday, although rising food prices threatened to throw more people into poverty.
Korea’s economy will grow 4.6 percent this year on the back of recovering domestic demand and export conditions, it predicted.
The Manila-based lender said the region’s economic recovery is still firm even though those growth rates are lower than the 9 percent expansion in 2010, when an exceptionally strong rebound from the global financial crisis took place.
The region included in the bank’s annual economic report ― 45 developing or newly industrializing Asian economies, excluding Japan ― are forecast to grow 7.8 percent in 2011 and 7.7 percent in 2012.
“Developing Asia, having shown resilience throughout the global recession, is now consolidating its recovery and rapid expansion in the region’s two giants ― the People’s Republic of China and India ― will continue to lift regional and global growth,’’ Chief Economist Changyong Rhee said.
However, the bank warned that inflation remains one of the region’s biggest challenges, with prices forecast to rise 5.3 percent this year before tapering off to 4.6 percent in 2012.
It said Korea’s economy will grow 4.6 percent, lower than Seoul’s official growth projection of a 5 percent expansion but slightly higher than outlooks proposed by other international institutes.
“The ADB forecast is in line with or slightly higher than those proposed by other international organizations,” a finance ministry official said. “We understand that the outlook is based on the belief that Korea will continue its steady economic growth.”
Asia’s developing countries are home to two-thirds of the world’s poor, who tend to spend more of their incomes on food and will be hit harder by rising food prices.
“This widens income inequality and could potentially lead to social tensions,’’ the report said.
A weak U.S. economy, sovereign debt problems in euro zone countries and Japan’s recovery from a devastating earthquake and tsunami are other possible threats to growth, the ADB said.
Higher oil prices stemming from unrest in the Middle East could also undermine the region’s recovery, the bank said, while also noting that Japan’s nuclear crisis is raising concerns about nuclear energy as an alternative energy source.
The ADB encouraged Asia’s emerging economies to forge so-called ``South-South’’ links with other developing nations in the southern hemisphere to avoid relying on the wealthy industrialized West, whose economies continue to slump after the 2008 global financial crisis.
East Asian economies including China, Hong Kong, Taiwan and Korea will lead growth, expanding an overall 8.4 percent in 2011 and 8.1 percent in 2012.
The ADB said China’s economic expansion will continue to be driven by government investment in infrastructure and other fixed assets, although it will slow as stimulus spending falls and interest rates rise. Export growth will also slow as demand from major Western markets remains sluggish, the ADB said.
India’s economy, which grew 8.6 percent in 2010, is forecast to expand 8.2 percent in 2011 before strengthening to 8.8 percent in 2012.
Southeast Asia, including Singapore, Thailand, Malaysia and the Philippines, will grow 5.5 percent in 2011 and 5.7 percent in 2012.
Indonesia and Vietnam are expected to expand more than 6 percent for the two-year period.
