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NEWS UPDATES 20 July 2010

ADB urges economies to end stimulus

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The Asian Development Bank (ADB) Tuesday upgraded its 2010 growth forecast for 14 East Asian economies and urged governments to unwind stimulus measures launched during the global recession.

The Manila-based lender upgraded its average growth forecast for Southeast Asia, Greater China and South Korea to 8.1 percent, up from April's projection of 7.7 percent, following a spate of stellar growth data from the economies.

"While most emerging East Asian economies are assured of a sharp V-shaped recovery this year, it is to early to say that the 'V' stands for victory," said Srinivasa Madhur, an ADB senior director who presented the findings.

He said the recovery's sustainability will depend on "the correct timing, policy mix and pace at which economic stimulus is withdrawn."

"The private sector must be strong enough to take over," he added.

Regional powerhouse China is expected to post 9.6 percent growth this year and 9.1 percent in 2011, when measures to prevent overheating kick in.

The 14 economies surveyed also included Brunei, Cambodia, Hong Kong, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

Citing Singapore, which has upped its 2010 gross domestic product growth forecast to 13-15 percent, Madhur said figures for the other economies have had to be adjusted upwards as well due to the strength of the regional rebound.

A pick-up in world trade and speedy responses from emerging East Asian governments to tackle the global recession ensured that their economies were able to recover swiftly and weather shocks, Madhur told AFP.

"Despite uncertainties emanating from the European debt crisis, the emerging East Asia's sharp V-shaped recovery from last year is very much on track and we see fairly broad-based strong growth across the region."

ADB's 2011 forecast remained unchanged at 7.2 percent as the bank expects growth to taper as advanced economies like the US slowed down as they pull back their stimulus measures.

Madhur said given the region's economic strength, countries should follow the US lead in withdrawing stimulus measures meant to prop their economies up during the recession, but must time it properly.

"We need to sustain the recovery and at the same time exit from the unprecedented policy stimulus in the region," he said.

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