WASHINGTON, April 22 (Bernama) -- Malaysia is among
the emerging East Asian countries expected to benefit
from the strong recovery in the United States and Japan,
increased demand for exports, and the long-awaited rebound
in the high-tech sector, said the latest World Bank
report on the region.
The outlook for the region is very positive both for
the big countries and for the smaller ones," said
the World Bank's regional vice president for East Asia
and Pacific, Jemal-ud-din Kassum, here.
Fuelled by growing exports, low interest rates, and
high investment in China, Vietnam, and Thailand, East
Asia's economy is expected to grow by more than 6.0
percent in 2004, the strongest since the beginning of
the global slowdown in early 2000, according to the
latest East Asia and Pacific Regional Update, the World
Bank's twice-yearly look at the region's economies.
In another positive sign for the region, domestic and
foreign investment are also showing signs of recovery.
Net portfolio flows to six large regional economies
-- China and the five post-crisis economies, Indonesia,
South Korea, Malaysia, the Philippines and Thailand
-- are estimated to have jumped to around US$33 billion
(US$1=RM3.80) from a net outflow of US$9 billion in
Foreign direct investment (FDI) into China has remained
stable at about four percent of its GDP since 1990,
while South Korea, Malaysia, the Philippines and Thailand
are receiving about 2.0 percent of GDP or about the
same as the world average.
FDI inflows to the six main East Asian economies were
estimated at about US$60 billion in 2003, about US$1.5
billion higher than in 2002. But of this total, about
US$53.5 billion went to China and only about US$6.5
billion to the other five economies, Indonesia, South
Korea, Malaysia, the Philippines, Thailand, whose combined
share of FDI continued to fall while China's share rose.
Increasingly other regional economies are also looking
forward to solid investment growth, the World Bank said.
Looking ahead, a combination of low interest rates,
availability of credit, and higher corporate profits
and productivity are an impetus to an upturn in investment
spending around the region, it added.
"By the end of 2003, the low and middle-income
countries of the region were growing at a combined rate
of 7.6 percent, their fastest rate since 1996. This
strong recovery to pre-crisis levels of growth also
bodes well for the region's poor, with an estimated
49 million moving above the US$2 a day line in this
latest upsurge," Kassum said.
Global investment in information and communications
technology and high tech electronics has rebounded and
is rapidly growing, to the benefit of many Asian economies.
This recovery will likely further growth in intra-regional
production and trade networks, centred on China, which
is taking in a growing number of its neighbours' exports.
Long the driver of regional growth, China's imports
surged 40 percent in 2003, and figures from the first
quarter of 2004 showed continued growth, fuelled by
demand for inputs to its manufactured exports, mostly
from China's neighbours.
Intra-regional trade still accounts for around 70 percent
of the growth in exports of East Asia's developing economies,
as has been the case for the past three years.
The World bank said,"But this trend will surely
slow as China cools from its current rapid growth rates.
The Chinese authorities are working hard to slow the
country's pace of growth to a more manageable level.
"To do this, they must balance the need to continue
creating jobs and reforming the economy while keeping
the economy stable and slowing down excessive investment,
the report says. Just what effect this slow down will
have on China's neighbours remains to be seen.
"Although it is true that slower growth in China
would hurt other economies in the region, our view is
that the impact would be modest," said Homi Kharas,
the World bank's chief economist for the East Asia and
"Even a 10 percent reduction in the growth of
China's imports would result in a loss of less than
one percent of gross domestic product (GDP) in South
Korea and Taiwan and less than half of one percent GDP
in a country like Thailand.
And if this slowdown took place in 2004, it would be
offset by an acceleration of Japanese imports from the
region and higher global trade growth."