East Asia's emerging economies are projected to grow by 6 per cent this year as policy makers face the delicate challenge of responding to a reduced pace of global trade expansion, the World Bank said on Wednesday.
For 2006, the region is expected to grow by 6.0 per cent, after 7.2 per cent in 2004, the Washington-based lender said in its twice-yearly outlook on East Asia.
The reduced pace of global trade expansion is due to the slowing growth in China, higher oil prices and larger dollar inflows to the region, it said.
It said the horrendous loss of life in the December 26 Tsunami disaster is expected to have a minor impact on the overall economic growth in the two most seriously affected East Asian economies, Indonesia and Thailand.
The 6 per cent forecast growth for emerging East Asia which includes the tsunami affected countries, is slightly down from lat year's cyclical peak of 7.2 per cent but should be more sustainable with balanced contributions from exports, consumer spending and investment.
"Looking forward, we expect growth to ease to a still solid pace of about six percent in 2005 and 2006," the World Bank said.
"The tragic tsunami disaster, while it had a horrendous impact in terms of loss of life, is not expected to have a significant impact on growth in two of the most seriously affected East Asian economies, Indonesia and Thailand.
Although the bank said economic growth this year was more sustainable than 2004, when it was at its fastest pace since the 1997-98 Asian financial crisis, policymakers will face many challenges associated with the slowdown.
"Much of the region's expansion has been bolstered by robust global and regional demand growth, supported by low real interest rates."
On the impact of skyrocketing oil prices, the World Bank said fallout on the region was "quite diverse" with crude exporters benefitting but importing nations such as China and South Korea feeling the pinch.
The breakdown of the outlook for the East Asian economies was as follows -- China's gross domestic product was projected to expand 8.3 per cent in 2005 after 9.5 per cent last year.
The Indonesian economy is projected to grow 5.5 per cent after 5.1 per cent in 2004 following financial aid promised by the international community helps to limit the Asian tsunami fallout on the country, it said.
In South Korea, 2005 growth is projected to ease to 4.2 per cent from 4.6 per cent as exports slow down, while Hong Kong's economic expansion will almost halve to 4.6 per cent from 8.1 per cent.
Malaysia and Singapore's growth will weaken from 7.1 per cent to 5.3 per cent and from 8.4 per cent to 4.2 per cent, respectively.
In the Philippines, growth will moderate from 6.1 per cent last year to 5.0 per cent in 2005 and in Thailand, it will slow from 6.1 per cent to 5.2 per cent.
Vietnam will record the fastest growth in the region after China, at 7.5 per cent this year following 7.7 per cent in 2004.
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