Year-ender: Asian economy enjoys relatively fast growth in 2005

Most Asian countries have enjoyed a relatively fast economic growth in 2005 with regional growth rate to attain at least 6.5 percent, while high oil prices have been a major block to growth of most economies in the region.

With the global economic situation staying largely benign, and reforms and structural changes taking place in some Asian countries to favor better growth conditions, the Asian economy has witnessed a quickening of growth in the second half of the year, while registering a stable growth in the first half of the year.

India has been showing particular robust growth since the beginning of this year, with an average quarterly growth rate of more than 8 percent. India's economy expanded faster than expected in the fiscal second quarter ending Sept. 30, sparking hope that the economy can achieve an 8 percent growth rate this year.

Services, which account for more than half of the Indian economy, has become the major driving force while trade, hotels, transport, financing, insurance and real-estate businesses stay booming.

In Singapore, the government boosted its forecast of economic growth in the next two years to 5 percent in early December after economy grew by 7.1 percent in the third quarter, mainly due to robust exports of electronics products.

South Korean economic data have shown much improvement in the second half of the year, with industrial output index rising 8 percent in October and 7.3 percent in September. The country is hopeful to attain a 3.6 percent growth rate as was expected by the Asian Development Bank.

Thailand and Indonesia also saw their economies expanding by more than 5 percent in the third quarter this year, better than expected by international monitoring institutes.

The Thai government said its economy has been supported by government spending and a recovery of agriculture and tourism, and it expects it to attain a 4.7 percent growth rate this year, lower than the 6.2 percent in 2004, due to high oil prices.

Indonesia's economy, which relies on domestic market by 70 percent, is being dampened by high inflation rates which hit 18.38 percent in November and 17.89 percent in October because of high oil prices and the abandoning of oil subsidy by the government.

The Philippine economy remains stable and is expected to grow from 4.7 to 5.3 percent this year, according to various estimates by the Asian Development Bank and local government. The country's economy has shown signs of slowdown with a 4.1 percent growth rate in the third quarter.

Despite increasing remittances and the adoption of a tax raising bill to increase government revenues, the Philippines still needs to carry out structural reforms to meet the goal set by the government in its 10-point anti-poverty agenda.

Malaysia's growth rate is expected to slow from last year's 7. 1 percent to 5.1 percent this year due to the global semiconductor industry, softer external trade, and slack construction activity. In a latest good sign of the economy, the country's exports rose by 12.4 percent in October because of increased shipment of electrical and electronics goods exports.

Looking forward to 2006, high oil prices remain a major problem faced by Asian economies. In many Asian countries, oil import bills are rising quickly, leading to high inflation rates and social pressure related with oil shortages.

The Asian Development Bank said that if oil prices continue rising next year, it could reach an inflection point at which investor and consumer confidence could begin to ebb quickly. Therefore, it said, policy responses are needed to facilitate macroeconomic adjustments and promote longer-run energy efficiency not only in Asia, but also around the world.

Another factor which could affect Asian economy in the coming year is avian flu pandemic, which has already hit a number of Asian countries.

The World Bank said in a semiannual report published last month that the prospect of an avian-flu pandemic is a "grave concern" for Asian economies.

It said that if the virus were to start spreading easily among people, damage likely would be more extensive and longer-lasting than from outbreak of severe acute respiratory syndrome, also known as SARS.

But so far the economic costs of the region in culling birds, improving animal health and adding surveillance systems have been equivalent to only about 0.1 percent of gross domestic product, according to the World Bank.

Source: Xinhua