The threat of a Persian Gulf war is slowing economic growth in much of Asia. Business and consumer confidence in Australia are particularly turning gloomy.
The Asian Development Bank has cut its forecast for the region's growth this year. The bank says the region's economies should expand an average of 5.6 percent. Three months ago, the ADB forecast six percent growth for Asia.
Ifzal Ali is the ADB's senior economist. He says fears of new war against Iraq, higher oil prices and slow export demand in many developed countries are crimping regional growth. "Uncertainty in the Middle East seems to be having a little greater negative impact than what we had thought earlier, because oil prices in terms of future deliveries have been going up almost one dollar a month," he said. "So all this is sort of weighing heavily both in consumer and business confidence all over the region here."
The uncertainty is spreading to Australia, one of the few developed economies that avoided going into recession in the past few years. The nation's central bank says growth this year will be slower than last year, though it did not give a forecast.
Two surveys indicate that Australian businesses and consumers may be growing worried. One survey done this month shows that more consumers are pessimistic about the economy than are optimistic.
In addition, a monthly survey of Australian business conditions, such as wage costs and capital spending, has fallen to its lowest level in a year. The National Australia Bank survey for January indicates weakness in the global economy is beginning to be felt in Australia.
The survey indicates many companies are putting off hiring new staff because of concerns about how an American-led war against Iraq could affect the economy.
However, in Hong Kong, economists at the investment bank, CLSA, have an upbeat forecast for the city. They say Hong Kong's economy should grow by nearly five percent this year, compared growth of just below two percent last year.
CLSA's economists say growing exports from China, a modest recovery in the property market and an end to nearly five years of deflation will lift Hong Kong's economy. By next year, they predict, the city's growth will hit eight percent.