A World Bank report on East Asia says a possible economic recovery in
China this year will be a positive sign for regional growth. But the
bank also says the economic situation remains a daunting challenge,
with a global recovery resting on the major industrial economies in
Asia, Europe and the United States.
A new World Bank
report says China's stimulus package will help the country's economy
expand by about 6.5 percent this year, although that is well
off the double-digit gains in recent years.
The report, released
Tuesday, says a recovery in China is likely to start this year and will
contribute to regional economic stability and growth.
Vikram
Nehru, the World Bank's chief economist for East Asia, says the China's
economic indicators in recent months have been good, and if sustained
they will ripple through the region.
"The evidence on what's
happening in China seems so pervasive and seems to cross so many
indicators that I think there is now a growing degree of confidence
that the stimulus package in China is having impact," he said.
"Purchases of inputs have soared, Even consumer confidence is up and of
course everybody knows bank lending has accelerated quite
significantly."
While a bottoming out in China's economy will
benefit Asia, the World Bank says only a recovery in developed
economies, such as Europe, Japan and the United States, will sustain a
regional expansion.
The World Bank forecast aggregate growth
at five-point-three percent for developing Asia. But subtracting China,
the average growth would be just over one percent, a "significant
decline" from recent years.
The bank expects Malaysia, Thailand,
and Cambodia to contract this year. Other economies would see much
lower, though still positive, growth.
Nehru says economic
stimulus packages and international cooperation are necessary to foster
a recovery. He praised the cooperative efforts of the Association of
Southeast Asian Nations and their commitment to free trade.
Despite the economic stimulus packages and cooperation, he says the global economic outlook remains daunting.
"We
are still in the middle of a perfect storm. For example over the last
for months things have gone from bad to worse in many of the advanced economies," he said.
Asia will likely see unemployment continue to rise, as it has in developed markets, and that means hardship for many.
"The
current projections imply that about 10 million more people in the
region will be left in poverty compared with what would have happened
if growth rates projected a year ago would have materialized," said
Ivallo Izvorski, a World Bank economist for East Asia. "More people
would have been lifted out of poverty, so clearly the implications are
quite stark."
The Bank said in the next few years, Asian
economies need to develop domestic demand, boost competitiveness,
penetrate new markets and attract foreign investment to return to the
high growth rates of the past.
