Experts at ADB conference see robust growth for Asia in future

ISTANBUL, Friday (AFP) - Asian nations will enjoy robust growth in the near future, business experts, academics and multilateral institutions agreed at the Asian Development Bank (ADB) annual conference here.

However some analysts warned certain risks remained and that growth in some countries would slow down.

The ADB, which is holding its annual meeting in Istanbul, said in its own study that Asia had remained resilient despite the killer tsunami that hit several regional countries in late December.

ADB chief economist Ifzal Ali said "developing Asia will stay on a high growth path in 2005-2007" largely because of domestic demand.

The Manila-based multilateral institution forecast that developing Asian nations would enjoy aggregate gross domestic product (GDP) growth of 6.5 percent this year, 6.6. percent in 2006 and 6.9 percent in 2007.

But he warned the region faced global imbalances including a potentially volatile US dollar, higher inflation in the United States, a tight oil market that was unlikely to ease in the near term as well as moderate export growth and rising imports.

A study by the Institute of International Finance, a global association of finance institutions, forecast 9.5-percent GDP growth for China and 8.0-percent for India this year.

Indonesia, South Korea, Malaysia, the Philippines and Thailand would post growth ranging from 4.0 to 5.3 percent in 2005, in many cases suffering a slowdown compared with 2004, the institute said.

Charles Dallera, managing director of the institute, said high oil prices, a deceleration in export growth, slackening domestic demand and a lag in economic reforms would limit the increase in the region's GDP this year.

Yuen Pau Woo, coordinator of the Pacific Economic Cooperation Council (PECC), said Japan's economic recovery was still on track and China would enjoy a soft landing this year thanks to consumer spending.

Chinese GDP growth was forecast at 8.5 percent for 2005 and 8.2 percent for 2006, a slowdown from the 9.5-percent growth last year, the PECC said.

Japan would see GDP growth of 1.3 percent in 2005 and 1.6 percent in 2006 owing to improved labor conditions and a contractionary fiscal policy, it said.

The economists largely credited China and partly India for leading the surge in Asian growth, through more inter-Asian trade.

Norbert Walter, chief economist of the Deutsche Bank Group, said prospects for developing Asian countries for the next two years were bright, with the region set to experience annual growth of six percent or more.

However Walter warned of "increasing inflation pressure," fuelled largely by high oil prices.

He also cautioned that trade protectionism was on the rise in the developed world, where many failed to realize that Asia was a booming market and not just a source of exports.

Epidemics like the bird flu or geopolitical and terrorist risks also continued to hang over the region, he added.

Walter remarked that domestic demand was still "an untapped source of growth in Asia" and advised that a shift to promoting domestic demand would be beneficial, especially in the face of global economic imbalances.

He said capital markets had to be developed, corporate governance improved and rule of law stressed to increase domestic investment.