'East Asian eco growth low'

Economic growth in East Asia will remain robust but will slow down to 6.8 per cent in 2005 owing to a less favourable external environment, the Asian Development Bank (ADB) said today.

This reduction from the gross domestic product growth of 7.6 per cent in 2004 was also attributed partly to oil prices reaching record highs this year, the ADB said in its 'Asia Economic Monitor' report.

However, the bank warned that the growth forecast was 'subject to risks from further increase in oil prices and a disorderly adjustment of the global payments imbalance.'

The report, released at the ADB headquarters in the Philippine capital, said a "loss of economic momentum in major industrial markets," and a drop in demand for new information technology products were the main reasons for the worsening external economic environment.

The bank noted that exports grew at a slower rate in the first half of 2005, in all of East Asia's larger economies except China. This development, coupled with higher oil prices and "a general bias toward tighter macroeconomic policies," resulted in the slower growth in most of the region.

Excluding China, East Asia is expected to post an average growth of 4.4 per cent this year, compared to 5.5 per cent growth last year, the ADB added.

China however will also see its growth slow down to 8.9 per cent this year from 9.5 per cent last year due to "a gradual softening of fixed investment and somewhat diminished export prospects," the ADB added.