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World Bank Predicts 'Rapid Growth' for Asian Economies

The World Bank has an optimistic outlook for East Asia's economy next year. A new World Bank report predicts that Asian economies are poised to grow at "rapid rates", despite the outbreak of Severe Acute Respiratory Syndrome, which eroded business and consumer confidence in the first half of 2003.

The World Bank says that excluding Japan, gross domestic product in East Asia and the Pacific will grow by an average of 6.7 percent in 2004. In light of the SARS crisis, the Bank cut its growth prediction for this year by more than half a percentage point to 5.5 percent.

The report says the rapid recovery of tourism and business travel in the region, as well as increasing demand in developed countries for Asian exports will push growth.

Jim Walker, the chief economist for the CLSA investment bank in Hong Kong, agrees with the World Bank's positive outlook.

He says China will drive much of Asia's growth as it continues to attract investment from within and outside the region.

"2004 looks particularly good for Asia, particularly driven by China," he said. "On average I would say that we are certainly in the region to 6 to 8 percent growth for next year for most countries [in Asia]. China and Hong Kong are slightly above that. Around about 7 percent GDP growth in Asia looks very possible."

Mr. Walker also says domestic demand in countries such as South Korea and Japan is going to be a major driver of growth there.

While the World Bank forecasts growth of 1.3 percent for Japan, Mr. Walker is more optimistic with his prediction of 2.6 percent.

But he predicts that Hong Kong, where the SARS crisis did the most economic damage, will see a strong recovery in 2004.

"The exciting one, from our perspective, is what we think will happen in Hong Kong, where our forecast is for close to 9 percent GDP growth in 2004, on the back of the disappearance of deflation," explained Mr. Walker. "The huge amount of liquidity in Hong Kong that stands now, and of course the growth in the mainland, that is generating opportunity for Hong Kong and many visitors."

The World Bank says East Asia's economic growth will far outpace the rest of the world, predicted to expand by 3 percent in 2004.