01/13/2011, 00.00
CHINA – EAST ASIA
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World Bank expects China to lead Asia in growth in 2011

The World Bank forecasts strong but lower growth in China and the Asia-Pacific region, especially because of higher inflation. Experts say China’s growth will be shaped by political decisions, like the value of the yuan.

Beijing (AsiaNews/Agencies) – China will drive growth in Asia this year, expanding by 8.7 per cent, down from 10 per cent last year, the World Bank said in a report released today. Economic growth across Asia will ease because of lower exports and government measures to check inflation.

“East Asia is well positioned to enjoy further years of strong albeit more moderate growth over the period to next year,” the Washington-based bank said.

The bank's forecasts for developing economies in East Asia and the Pacific include China, Indonesia, Thailand, Vietnam, the Philippines and Malaysia. The region is forecast to grow 8 per cent in 2011, down from 9.3 per cent in 2010, according to the report.

However, the bank also expressed concerns about the possibility of so-called asset bubbles whose outcome is unpredictable.

China's growth is easing as Beijing winds down its stimulus and tightens credit to cool inflation and surging housing prices, the report said.

Nevertheless, strong Chinese demand for raw materials and components should buoy exports by its Asian neighbours.

The Washington-based lender forecasts China’s economy to grow 8.4 per cent in 2012.

China's inflation surged to a 28-month high in November of 5.1 per cent, driven by an 11.7 per cent jump in food costs.

As the price of staple foods climbs, investors might start buying more commodities in hopes of earning higher returns at a time of low interest rates in the West.

Region-wide, exports should expand by 12 per cent this year.

Indonesia's growth this year should accelerate to 6.2 per cent up from last year's 5.9 per cent, the bank said.

Thailand's expansion should slow sharply however, falling to 3.2 per cent from last year's rapid 7.5 per cent, because of ongoing political uncertainty and the street protests of April-May 2010, which affected in particular tourism and the service sector.

Vietnam's growth should moderate to 6.5 per cent from last year's 6.7 per cent.

Analysts observe though that it is hard to make forecasts for the region since China’s growth will be shaped by complex political considerations. After holding the yuan-dollar exchange rate steady for several months, Beijing has let it revalue right before President Hu Jintao’s visit to Washington.

Both the United States and European Union want China to revalue its currency in accordance with its market level. Beijing has instead kept it below its real value to favour exports, but at the cost of higher inflation.

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