MANILA, Philippines (AP) -Following peak growth of 7.2% last year on robust exports and investment, East Asia’s economies excluding Japan are expected to ease their expansion to about 6% in 2005 -a rate that could still trim the region’s number of poor by about 35 million, the World Bank said Wednesday.
The December tsunami tragedy, which killed up to 184,378 people and left more than 50,000 missing, was not expected to have a significant impact on growth in the two most seriously affected economies, Indonesia and Thailand, the bank said in a biannual report.
“The most likely scenario is still one where the regional economy moves from cyclical recovery into a phase of more moderate but sustained expansion,” the bank said, noting the impact of high oil prices and China’s efforts to cool its rapid growth.
In China, where the economy expanded 9.5% in 2004, government efforts to avert overheating have had mixed results. Growth has remained robust, but is expected to slow down to just over 8% this year and 7.5% in 2006, the bank said.
China has two-thirds of Asia’s poor, but their numbers are estimated to have fallen by 46 million to 416 million -or from 36% in 2003 to 32% in 2004, the bank said.
“What is clear is that this kind of sustainable growth has the potential to bring poverty rates in developing East Asia down by as much as 5 or 6%, amounting to about 35 million people a year,” said Jemal-ud-din Kassum, regional vice president for East Asia and Pacific.
The number of people living on US$2 (euro1.5) a day or less in East Asia is estimated to have fallen to 631 million -or 8% -in 2004, the most rapid rate of annual decline since 1999 at the end of the regional financial crisis.
The fall has been linked to more than 8% growth in developing East Asia, which comprises China, Indonesia, Malaysia, the Philippines, Thailand, Vietnam and some smaller economies.
This year, poverty is expected to affect about 595 million people—or 32% of the population—down from 50% in 1999 and 67% in 1990.
Across the region, the largest contribution to growth came from investment in economies other than China, the report said, noting that copper-and-gold rich Mongolia grew by 10.6%—the fastest in the region.
The World Bank also urged China and Malaysia to let their currencies appreciate, warning that their fixed exchange rate systems are attracting the kind of currency speculation that ignited the Asian financial crisis in the late 1990s.
At the time, East Asian economies boomed as foreign capital poured in.
But the boom became a bust in 1997, when the currency systems in many nations collapsed in the face of attacks from speculators.
Following the December 26 earthquake and tsunami, the bank pointed out that natural disasters were drawing more attention as a major source of risks for the poor and destruction of fragile economic gains.
While noting recent action to strengthen early warning systems, the bank said “it seems clear that a warning system aimed at multiple hazards will be much more cost efficient and sustainable than one just for tsunami, which are a low probability event.”