World Bank lowers 2009 growth outlook for E. Asia to 5.3%+

TOKYO, April 7 Kyodo -
The World Bank lowered its growth outlook for 20 developing East Asian
economies this year from 6.7 percent made last December to 5.3 percent in its
latest economic forecast for them released Tuesday, reflecting
worse-than-expected developments in the world economy.
The bank projects the real growth rate for developing East Asia, which includes
low- and middle-income economies such as China, South East Asian countries and
Pacific islands, will slow from 8.0 percent in 2008.
The outlook excludes Japan and the newly industrialized economies of Hong Kong,
South Korea, Singapore and Taiwan.
Expecting that China will grow 6.5 percent this year, bolstered by the
country's current 4 trillion yuan stimulus package, the bank said, ''A ray of
hope may be emerging with signs of China's economy bottoming out by mid-2009.''
The bank's semiannual ''East Asia and Pacific Update'' said a recovery in China
will likely begin this year and take full hold in 2010, contributing to the
region's stabilization and possible recovery.
But the report warned that a ''truly sustainable recovery in the East Asia and
Pacific region ultimately depends on developments in the advanced economies,''
with China still remaining heavily reliant on exports to markets that continue
to contract.
Vikram Nehru, the bank's chief economist for East Asia and the Pacific, said at
a Tokyo press conference, ''China is a very important market for developing
East Asia. The large impact will really be on commodity exporters, because much
of the (nation's) stimulus package is affecting things like construction,
infrastructure and so forth.''
Ivailo Izvorski, the World Bank's lead economist in the East Asia region, said
the bank estimates China's economy will expand 7.5 percent in 2010 and if the
base scenario remains intact, it will have a favorable impact on the rest of
Asia.
Nehru, however, noted downside risks to the basic outlook, saying, ''We can't
rule out the possibility of some further bad news on the financial system,
which will have a contagion effect for the rest of the global economy.''
The chief economist said he expects that East Asian leaders will agree to
coordinate each country's policies to spur growth and pledge that they will not
''retreat into protectionism'' when they meet in Pattaya, Thailand, later this
week.
The report also said the region's low-income countries are expected to be
''among the worst affected by the slowdown'' because there is ''limited room
for government intervention to help those in need.''
Specifically, the Washington-based development bank said Cambodia will likely
experience the ''strongest decline in growth'' from a 5.5 percent expansion in
2008 to a 1.0 percent contraction in 2009 as its garment and tourism sectors
have been severely hurt by the global economic slowdown.
The bank also said lower commodity prices will especially damage economies such
as Laos, Mongolia, Papua New Guinea and East Timor.
==Kyodo