JETRO Report, 2007 Economic Outlook for East Asia.

Tokyo, Japan, Dec 15, 2006 - (JCN Newswire) - The East Asian economy (excluding Japan) is projected to grow by 7.4% in 2006, according to a report released today by the Institute of Developing Economies, Japan External Trade Organization  (IDE-JETRO). The report, entitled "2007 Economic Outlook for East Asia", provides growth estimates for 2006 as well as prospective 2007 growth figures for China, the four Asian NIEs (the Hong Kong Special Administrative Region (SAR), the Republic of Korea (ROK), Singapore and Taiwan) and the ASEAN 5 (Indonesia, Malaysia, the Philippines, Thailand and Vietnam).

The forecast for 2007 is based on the following assumptions: the advanced economies will grow at slightly slower paces (the US at between 2.0-2.5%, Japan at around 2%, and the EU at between 2.0-2.5%); the yen-US dollar exchange rate is expected to remain at the level seen in the later half of 2006; and crude oil prices will decrease by 7 to 8% from their 2006 level.

Forecasted Growth in 2007

According to the report, the East Asian economy as a whole will post solid growth of 7.4% in 2007, down 0.5 points from last year's figure, underscoring concerns over slower economic growth in China and the four Asian NIEs. The combined inflation rate is estimated to decline 0.4 points year-on-year to 3.5%.

The Chinese economy, despite projected slowdowns in domestic and external demand, is forecast to grow at a (still high) 9.6% rate in 2007, down 0.9 points from this year's projected growth figure.

The combined growth rate for the four Asian NIEs in 2007 is estimated at 4.7%, down 0.5 points from the projected 2006 figure, owing to a slowdown in external demand. ROK and Taiwan are expected to grow at lower rates in 2007, 4.4% and 4.1% respectively, due to weaker demand resulting from a slowing Chinese economy. Estimated growth rates for Hong Kong SAR and Singapore in 2007 are also lower (compared to this year's projected figures), at 5.9% and 6.1% respectively.

The report predicts 5.6% growth for the combined economies of the ASEAN 5 in 2007. Individually, Indonesia and Thailand are forecast to post accelerated growth rates of 5.8% and 4.9% respectively, on the back of strong domestic demand. Malaysia will grow at 5.2%, reflecting slower domestic and external demand, while the Philippines will expand 5.3%, also reflecting a slowdown in (external) demand. The Vietnamese economy is forecast to grow at an accelerated pace of 8.4% in the coming year.

Estimated Growth in 2006

According to the IDE-JETRO report, the East Asian economy as a whole is predicted to post growth of 7.9% in 2006, up 0.4 points over last year's figure, driven by accelerated growth in China and the four Asian NIEs. The combined inflation rate is estimated to increase 0.5 points year-on-year to 3.9%.

Driven by growth in investment, the Chinese economy is projected to grow by 10.5% in 2006, 0.3-points higher than the figure achieved in 2005.

The combined growth rate for the four Asian NIEs in 2006 is estimated at 5.2%, a 0.6-point increase over last year's figure. Individually, ROK and Hong Kong SAR are estimated to grow at 4.8% and 6.8% respectively, driven by growth in domestic demand (and despite an expected decrease in net external demand). The Taiwanese economy is predicted to grow at 4.4% in 2006, with solid exports offsetting weaker domestic demand.

The combined growth rate for the ASEAN 5 in 2006 is estimated at 5.4%, roughly the same as last year's figure. Indonesia, despite stagnant investment growth, is estimated to grow by 5.2%. Buoyant external demand compensated for slower domestic demand in Thailand, where 4.8% growth is expected. Malaysia is estimated to grow at 5.7%, due to expanding investment, while Vietnam is predicted to grow at 8.2%, led mainly by the country's industrial and services sectors. The Philippines, despite weak investment, is estimated to grow by 5.5%, on the back of thriving external demand and consumption.

About Japan External Trade Organization (JETRO)

JETRO, or the Japan External Trade Organization, is a government-related organization that works to promote mutual trade and investment between Japan and the rest of the world. Originally established in 1958 to promote Japanese exports abroad, JETRO's core focus in the 21st century has shifted toward promoting foreign direct investment into Japan and helping small to medium size Japanese firms maximize their global export potential.

Source: Japan External Trade Organization (JETRO)

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