Growth in East Asia to soften in 2007 with lower inflation - ADB

07 Dec '06

3 min read

East Asia's rapid economic growth in gross domestic product (GDP) is expected to soften in 2007 to a still robust 4.4 percent from 4.9 percent this year, says a report released by ADB.

An expected slowdown in growth in the US and euro area will only reduce demand for East Asia's exports slightly. Coupled with resilient domestic consumption, this will sustain economic expansion across the region.

Measures taken by the People's Republic of China (PRC) to curb over-investment will continue to bring its economic growth back to a more manageable level, while inflation across the region is expected to moderate further as growth eases.

Excluding Japan, regional gross domestic product (GDP) is projected to drop to 7.0 percent in 2007 from 7.7 percent this year, according to the semiannual Asia Economic Monitor (AEM), which covers the 10 members of ASEAN; plus the PRC; Japan; Republic of Korea; Hong Kong, China; and Taipei,China.

“On balance, in 2007 East Asia faces an external economic environment that is expected to be somewhat less supportive of exports and growth, but more conducive to containing inflationary pressures,” says Masahiro Kawai, Head of ADB's Office of Regional Economic Integration (OREI) and Special Advisor to the ADB President.

In Japan, GDP growth is likely to be 2.8 percent in 2006 and is expected to slow modestly to 2.4 percent in 2007.

The report forecast the PRC economy to make a relatively smooth transition from projected 10.4 percent growth in 2006 to 9.5 percent in 2007.

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