East Asia's economic growth this year should be the strongest since the Asian financial crisis, despite high oil prices and slowing export growth in the second half of 2004, the Asian Development Bank (ADB) said on Monday. Growth was likely to moderate to 6.5 percent in 2005 with oil prices, a hard landing for China, and a disorderly adjustment of the US current account deficit the main risks, the Manila-based ADB said in its semi-annual Asia Economic Monitor (AEM).
Strong domestic demand and surging exports were expected to have lifted growth to 7.6 percent this year from 6.9 percent in 2003, the bank said in its review of the 10 Association of South East Asian Nation economies plus China and South Korea.
The previous AEM released in July had forecast 7.3 percent growth in 2004.
"Despite high oil prices and some loss of momentum, this year East Asia's growth is likely to be the highest since the 1997 financial crisis," the ADB said, citing estimates from Consensus Economics, a private group that collates forecasts from about 200 economic and financial forecasters in 70 countries.
The multilateral financing institution said net private capital flows to the five East Asian countries most affected by the Asian crisis - Thailand, Indonesia, South Korea, Malaysia and the Philippines - were set to reach a post-crisis high of $33 billion this year after quadrupling to $25.4 billion in 2003.
"This reflects strong global growth, an increase in risk appetite among investors, low interest rates, and strong economic fundamentals in the region," the bank said.
But economic growth was expected to fall back to 6.5 percent in 2005 amid rising domestic inflation and higher US interest rates, the ADB said.
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