The Asian Development Bank says the weak U.S. economy and the threat of war in Iraq is likely to trim economic growth in Asia next year. However, new data show that Asian economies performed better than expected this year. The Asian Development Bank predicts that China, South Korea, Vietnam and India will lead the region's growth next year.
The ADB, which looks at developing economies across Asia, trimmed its prediction for Asia's gross domestic product growth. Now it expects the region to show GDP growth of 5.6 percent next year, instead of the earlier forecast of 5.7 percent.
The bank says the regional economy grew about 5.6 percent this year, well above its original forecast of 5 percent.
"The main message for 2002 is that developing Asia has done significantly better than expected," said Ifzal Ali, the ADB's chief economist. "Consumption growth has been very strong in the region accompanied by very robust export growth. Turning to 2003 we find that in Asia growth in both the People's Republic and China and Korea are likely to abate from the very high rates they achieved in 2002."
Mr. Ali says China's growth is likely to cool somewhat to 7.2 percent next year from 8 percent this year. He says weak export demand from the lackluster U.S. economy could also slow South Korea's growth.
Analyst Salishe Jha with the Singapore bank DBS thinks growth rates for China will not soften that much. "We're not that much concerned about China at this point in time," said the analyst. "The infrastructure requirements of China are vast and that's the reason why the public investment channel keeps on going and pumping growth going forward."
Southeast Asia is one area where the ADB predicts growth will strengthen. Mr. Ali says sustained domestic demand along with rising exports will push the region's GDP growth to 4.3 percent next year, up from 3.9 percent this year.
He warns, however, that continuing deflation in the region will erode some of Asia's economic growth. He adds that the possibility the United States will go to war with Iraq could force up oil prices, which could hurt growth in many Asian nations.