The Asian Development Bank says East Asian economies are moving toward
a recovery after sharp declines triggered by the global economic
downturn. But the bank's economists say a sustained recovery will
happen only after the major industrialized economies begin to grow
again.
The Asian Development Bank report released Thursday says
the economies of East Asia are leaving behind the worst of the economic
downturn that hit the world last year.
Jong-Wha Lee, a senior
ADB economist, says growth in the emerging East Asian economies fell
because they still depend heavily on exports for growth.
"The
four middle-income ASEAN economies - that includes Indonesia, Malaysia,
Philippines and Thailand - as a group have contracted one percent in
the first quarter of 2009. Thailand posted the largest decline by 7.1
percent," he said.
But, the ADB report says, the pace of
decline has slowed. The strongest signs of a recovery are in the
emerging East Asian financial markets, which have risen almost 70
percent since last November.
During the second quarter China's
economy grew almost 8 percent, while early estimates show Singapore's
contraction has moderated. Industrial production has also picked up in
Indonesia, Malaysia, Philippines, Thailand and Vietnam.
"Emerging
East Asia has entered the transition from recession to recovery as
expansionary policies gain traction. In particular, indicators from
China are very encouraging - hopes are growing that China may lead
Asia's recovery. [But] signs of the recovery remain still tentative
while any pending recovery will likely to be weak and fragile," said
Lee.
The ADB also is cautious about hopes that China's growth
will boost other Asian economies, in part because China competes with
its neighbors in many export markets. The bank adds that China's
growth still heavily depends on spending to improve the infrastructure.
In short, the ADB says, Asia needs a strong economic recovery in the United States, Japan and Europe.
"So
it is China alone or Asia alone cannot be the single engine of growth
for Asia. We need two engines - the other engine - perhaps more
important - is the major industrialized countries. So without a full
global recovery, Asia will be (find it) very difficult to go back to
the strong sustained growth," said Lee.
The bank forecasts that emerging East Asian economies will expand by about three percent this year, and six percent in 2010.
But,
the ADB warns a prolonged recession in the developed countries and the
risk of deflation could slow growth. The bank calls on governments to
refocus on domestic consumption and away from exports, to create more
sustainable growth.
