Manila, Philippines (BBN)- Economic growth in emerging East Asia will continue to moderate into 2012 as growing sovereign debt problems in Europe and an anemic US economy raise the spectre of a deep global economic downturn, the Asian Development Bank (ADB) said on Tuesday.
In the event that both the eurozone and the US economies contract sharply, the impact on emerging East Asia would be serious yet manageable, the ADB said in its latest Asia Economic Monitor.
The semi-annual report released on Tuesday assesses the 10 ASEAN economies – Brunei Darussalam; Cambodia; Indonesia; Laos PDR; Malaysia; Myanmar; Philippines; Singapore; Thailand; and Viet Nam – as well as those of the People’s Republic of China (PRC); Hong Kong, China; the Republic of Korea; and Taipei,China.
The ADB cut its forecast for the region’s growth in 2012 to 7.2 percent from the 7.5 percent forecast in the September Asian Development Outlook 2011 Update. Growth is still forecast at 7.5 percent for the current year.
“The turmoil emanating from Europe poses a growing danger to trade and finance within emerging East Asia; so the region’s policymakers must be prepared to act promptly, decisively, and collectively to counter what could be an extended global economic slowdown,” Iwan J. Azis, Head of ADB’s Office of Regional Economic Integration, said in a statement.
In a special section — Can East Asia Weather Another Global Economic Crisis? — the report said the events that could lead to a recession in the eurozone and a new economic downturn in the US. It examines how a new global economic crisis would affect the region under differing scenarios. East Asia comprises emerging East Asia plus Japan.
The ADB estimated that the eurozone economy will expand 0.5 percent next year with the US economy growing by 2.1 percent. For 2011, ADB is still forecasting growth of 1.7 percent and 1.6 percent for the two economies respectively.
Growth in the PRC is likely to moderate even as domestic demand continues to rise, and is now forecast at 8.8 percent in 2012 after expanding 9.3 percent this year. In September, ADB had forecast growth of 9.1 percent in 2012.
The newly industrialized economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei,China, will see slower growth both this year and next year in large part because they are more dependent on international trade than their neighbors, it said, adding that this leaves them highly vulnerable to an economic contraction in Europe and the US.
ASEAN’s economies will also grow more slowly than previously expected. Thailand, hit particularly hard by the recent floods, should recover from supply disruptions next year. ADB now sees Thailand’s economy growing a smaller 2.0 percent this year, but is maintaining its 4.5 percent growth forecast for 2012.
Japan’s economy is forecast to bounce back from the effects of the recent natural disasters as supply chains are rebuilt, but the strong yen will likely hurt exports while domestic demand is likely to remain weak.
BBN/SSR/AD-06Dec11-3:43 pm (BST)