Press conference on 2006 economic forecast for asia and pacific

 

The “moderate deceleration” in economic growth in the developing countries of Asia and the Pacific reflected the general slowdown in the global economy this past year, instigated primarily by high and volatile oil prices, softening global trade and heightened inflation, according to a region-specific economic survey launched today by the United Nations.

Developing economies in Asia and the Pacific region grew by 6.6. per cent in 2005, down from 7.4 per cent in 2004, says a new report, Energizing the Global Economy, compiled by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).  Notwithstanding that slight downtrend, the region’s overall economic performance -- led by China’s 9.5 per cent growth last year, on the heels of double-digit growth in 2004 -- had been remarkable.

The annual report was launched simultaneously today at United Nations Headquarters in New York, and 13 capitals throughout the Asia-Pacific region, just ahead of the Commission’s sixty-second session, set for Jakarta, Indonesia, from 6 to 12 April 2006.  The Chair of ESCAP’s Jakarta session, Yerzhan Kazykhanov, Kazakhstan’s United Nations Ambassador, was at the Headquarters press conference along with Rob Vos, Director of the Development Policy Analysis Division, Department of Economic and Social Affairs, and Kazi Rahman, Head of the Regional Commission’s New York Office.

It highlights principal policy issues and challenges facing the region over the next 12 months, including the course of world oil prices, the threat of global external payment imbalances unwinding precipitously, the impact of higher interest rates and the potential for the avian influenza to develop into a human pandemic.

Mr. Kazykhanov told reporters that, along with impressive growth in China and other developing countries in East and North-East Asia, Japan’s recovery was continuing apace, largely due to increased private consumption and the successful implementation of structural reforms in the banking and private sectors.  Meanwhile, strong export performance offset by weak domestic demand had eased growth somewhat in Australia and New Zealand, the region’s other developed economies, he added.

Despite rising oil prices, countries in South Asia maintained their growth momentum in 2005, Mr. Kazykhanov said.  Both India and Pakistan, which had achieved impressive growth rates in recent years, were projected to maintain their current momentum in 2006 and beyond.  The three top sectors -– agriculture, industry and services -– were expected to drive the growth of the two economies.  He noted, however, that growth in the wider South Asian subregion had eased somewhat after unusually good performance in 2004, which had been driven by strong global demand for electronics and information and communication technology products.

As for the Pacific Islands, he said that most of their economies had expanded, due mainly to growth in tourism, continued agricultural diversification and enhanced development in both the agriculture and fishing industries.  Turning to North and Central Asia, he said ESCAP’s survey highlighted the seventh consecutive year of gross domestic product (GDP) growth in that subregion -– the longest sustained expansion since the beginning of the transformation of many of the countries there to market-based economies in the early 1990s.  This strong growth had been underpinned by continuing increases in foreign trade and external investment.

The medium- and long-term prospects for growth for the countries of North and Central Asia were based on the continuation of high energy prices, he said.  Those countries planned to increase energy and hydrocarbon trade with China, India, Japan, Pakistan and the Republic of Korea.

Among the least developed countries in the region, Bangladesh’s economy had experienced steady growth in recent years, he said, adding that the country’s GDP growth had been translated into visible progress on the social front and was reflected in its upgrading to “medium developed country” in the United Nations Development Programme (UNDP) Human Development Index.  Meanwhile, in Cambodia, the Lao People’s Democratic Republic and Myanmar, the general trend in GDP growth had been maintained in 2005, and the prospects for 2006 indicated a continuation of that trend accompanied by an easing of inflation.

He said that throughout the development community there was near consensus that oil and energy prices were likely to remain high for the foreseeable future, within a range of $50 to $55 a barrel.  There were fears, however, that oil prices could jump to $100 a barrel.  That could be driven by a number of factors, including imbalances between supply and demand, as well as the supply and demand for finished products because of the shortage of refining capacities.  Unfortunately, there were no immediate remedies on the horizon, he added.

Another troubling factor was the risk of a major outbreak of avian influenza, as incidents of the virus had been reported as far afield as the Russian Federation and Eastern Europe.  The disease had already had a huge impact on the poultry industry region-wide, and its serious affects on public health systems was just now becoming clear.  He said ESCAP had laid out a two–pronged strategy for averting a pandemic:  containing the current outbreak at its sources and limiting its possibility to spread; and working on a contingency plan to tackle a possible pandemic, including the stockpiling of antiviral drugs.

Poverty and inequality, as well as unemployment were also major challenges for the region, he continued.  Some 680 million people in the region remained poor and, although figures showed that the number of people in absolute poverty had declined, the number of those living in relative poverty had gone up.  Though the region had been growing faster than most of the world for the past two decades, poverty eradication was its most important challenge and the “status quo” might not be sufficient to generate the funds for key infrastructure needs.  The report noted inequality in both income and access to public services, such as education, health, housing and transport.

He added that Governments needed to intervene boldly with measures to ensure that the poorest sectors of society had access to basic services.  The report stressed that unemployment was one of the chief factors driving poverty and broader inequality in the region, particularly among youth.  He also highlighted the special challenges facing the region’s landlocked developing countries.

He said that other longer-term issues related to the ongoing challenge of poverty reduction, utilizing the benefits of home remittances to simultaneously improve social indicators and macroeconomic fundamentals, and re-energizing the trade liberalization agenda following the Sixth World Trade Organization Ministerial Conference, held in Hong Kong, China, in December 2005.

Mr. Vos stressed the important role Asian economies played in overall global economic development.  Indeed, he said, perhaps the Asian economies were partly to thank for continued global economic progress, even as major developed countries struggled with high debt and sluggish economies.  The strong growth of China and India were having an increasing impact on the global economy, he added.

Mr. Rahman told correspondents that, while the Asian oil economies had adjusted well to the increased energy prices, the least developed countries, small island developing States and developing countries in other regions, including as far afield as sub-Saharan Africa, were being adversely affected.  At the same time, the dynamism of Asian economies had driven greater interregional, as well as South-South, investment and cooperation.

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For information media • not an official record