Record growth for Asia. GDP wil be up 7%, partly thanks to China
Hong Kong (AsiaNews) In 2004 economic growth across Asia will reach record levels since the financial crisis that hit the continent in 1997 and 1998. Such growth has been possible thanks to the improving economies recorded in China, India and Thailand, the ING Bank of Hong Kong research offices said.
Such growth will be sustained by exports, which are in turn helped by favorable exchange rates (amply undervalued) with other countries of the region. The increase in exports will also lead to growth of internal demand, creating what economists call a "virtuous circle of growth".
According to the ING, Asia's average Gross Domestic Product (GDP) not counting that of Japan will increase by 7%. Moreover, thanks to growth recorded across Asia, even Japan will be able to show a positive 2.8% increase, thereby coming out of 10-year downturn.
For its dynamism and size China's role is ever the more dominant in determining the region's economic growth cycles. Today China counts for 17% of all regional commercial trade.
The incredibly rapid growth of the Chinese economy, however, has raised fears of an economic "overheating", that is, uncontrolled growth in terms of inflation due to excessive investments made in new business.
ING researchers say Chinese authorities have already begun taking action to slow down demand in a prudent fashion and that the propelling force behind the Chinese economy and its exports is the weakness of its yuan-renminbi currency, undervalued by 15-20%.
According to Xu Hongyuan, deputy directory of the Development and Research Department at the State Information Center, China's economy will grow by 9%, two percentage points higher than the government's own established goal.
In the current year's first trimester China's GDP has increased by 9.7%, while investment in fixed capital (i.e. plants and machinery) has shown a 43 % increase with respect to the same period last year. Despite widespread fears of inflation, official figures indicate that there will be only a slight 2.8% increase in prices compared to the same trimester last year. (MdO)
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