Posted on: Saturday, November 10, 2001

Asia, Pacific growth forecast drops

By Adam Brown
Associated Press

MANILA, Philippines — Economic growth among developing nations in Asia and the Pacific will fall this year to 3.4 percent — from 7 percent in 2000 — as the terrorist attacks in the United States and the war in Afghanistan put pressure an already fragile world economy, the Asian Development Bank said yesterday.

The ADB predicted a "modest rebound" in 2002, but until then economies that already are hurting will suffer as exports plummet, borrowing becomes more expensive and investors shun increased risk.

In a 2001 outlook released in April, the international lending institution predicted 5.3 percent growth in the area's developing economies. The report dropped the forecast dramatically after the Sept. 11 attacks.

The ADB forecasts, which do not include Japan, Australia or New Zealand, are roughly in line with predictions from other financial institutions.

The ADB report said fading hopes of speedy economic recovery in the United States, Japan and Europe's Euro zone — which buy half of the exports from developing Asia and the Pacific — further endangered the region.

However, the ADB expressed "cautious optimism" that measures by policy makers, the global economy's resilience and projects already under way to stimulate growth will foster 4.5 percent growth in the area in 2002, down from 6.1 percent in the April forecast.

Growth in the newly industrialized economies of Hong Kong, Taipei, South Korea and Singapore will plummet to 0.1 percent this year from 8.4 percent in 2000, said the update released by ADB headquarters in Manila.

Economies of Hong Kong, Taipei and Singapore will likely contract as exports of the newly industrialized economies drop 10.1 percent this year, compared with a 19.5 percent rise in 2000, the study said. Taiwan is suffering the worst with a 15 percent decline this year after 21.8 percent growth in 2000.

The ADB earlier forecast a combined 4.3 percent growth rate.