Asia's 2008 growth likely constrained by US woes
Updated: 2007-12-13 19:51
Singapore -- Asia's economic growth is likely to be constrained by an expected slowdown in the US economy and potential spillover from the subprime mortgage crisis, two economic forecasts released Thursday said.
Emerging East Asian economies, which includes China, will likely grow a collective 8 percent next year, down from the 8.5 percent rate forecast for this year, the Asian Development Bank said in a twice-yearly report.
"If the US economy enters a recession and the global economy substantially slows in tandem, the impact on emerging East Asian economies will be potent," the report said.
The US economy - a major export market for Asia - has been buffeted by a slowdown in its housing market and a credit crisis after a spike in defaults on mortgages to borrowers with poor credit histories, which has led to losses at major banks and global market turmoil.
Even if the US economy avoids a recession, the ADB predicted financial markets will remain volatile for some time.
Other risks include further tightening of global credit, abrupt changes in exchange rates and a continued rise in oil and commodity prices, the Manila-based bank said.
Similarly, the Pacific Economic Cooperation Council said in a separate report that because of possible fallout from the subprime crisis, the outlook for the broader Pacific Rim region is the most uncertain it has been since the 1997-98 Asian financial crisis.
Still, Singapore-based PECC predicted that the US economy would not enter a recession and that the troubled American housing market will recover by the second-half of 2008.
The think tank, which comprises business executives, government officials and academics from more than 20 economies stretching across the Pacific from Australia and China to Chile and Canada, was "cautiously optimistic" about the region's outlook. It projected member economies' collective growth to remain at 4.9 percent next year, about the same as this year.
"The risks come principally from the United States," said Woo Yuen Pau, the report's coordinator.
While the US economy barreled ahead at a 4.9 percent rate in the third quarter, many economists expect it to slow to a barely discernible 1.5 percent or even less in the current quarter.
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