ADB cuts East Asia growth forecast as risks grow

AP News
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Posted: Dec 06, 2011 12:19 AM
ADB cuts East Asia growth forecast as risks grow

Economic growth in East Asia will continue to wane in 2012 as sovereign debt problems in Europe and an anemic U.S. economy raise the risk of a deep global downturn, the Asian Development Bank said Tuesday.

The ADB said it cut its 2012 growth forecast to 7.2 percent from the 7.5 percent predicted in September for 14 East Asian economies excluding Japan. It said in a worst-case scenario _ in which the U.S. and Europe slow as much as they did in the 2008-2009 global crisis _ East Asia would grow only 5.4 percent in 2012.

The Manila-based lender said it's "cautiously optimistic" about the outlook but notes that global conditions have worsened since midyear.

The report said that major risks include a deep recession in both the Europe and the U.S., rising protectionism and resurgent inflation.

"The recovery in advanced economies lost steam this year and they will continue to struggle," the report said. "While U.S. economic growth could strengthen somewhat, the eurozone will likely fall into either a brief recession or a more severe long-term downturn."

Emerging Asian economies are "certainly not immune" to a major slowdown in advanced economies, which would hurt their economic growth, it said.

The report covers China, Hong Kong, Taiwan, South Korea and 10 Southeast Asian countries.