Agence France Presse

Singapore, May 31:

Economic growth in the Asia-Pacific will continue to outpace the rest of the world in the next five years but a Chinese slowdown looms as a genuine threat to the region, the Economist Intelligence Unit (EIU) said. In a report received here today, the London-based EIU said the Asia-Pacific’s economies, outside Japan, would grow at an average annual rate of 5.8 per cent between 2004 and 2008, faster than any other region in the world. The EIU said the region’s growth this year was likely to be 6.5 per cent but the environment will be less friendly in 2005 and beyond with Beijing’s efforts to rein in its red-hot economy the main reason.

“Concerns are mounting about the pace of investment and credit growth in China,” it said, “If, as seems likely, a bubble is building, this could have significant repurcussions, not just for China itself but for the rest of the region.” The EIU said China’s economy should slow to below eight per cent between 2004 and 2008, down from the plus-nine per cent rates experienced recently, and a potential investment bubble is not expected to balloon out of control.

“Nevertheless, even the gentle deflating of a bubble could be painful for business,” it said. China’s booming economy, which has seen the country emerge as the global workshop producing virtually everything from hi-tech computer chips to silk scarves, has been a boon for the region in the past few years. Previously Asia relied mainly on the US to buy its exports.

Even if China’s economy maintains solid growth, the EIU said Asian countries must undergo “potentially disruptive economic restructuring” to latch on to its giant neighbour’s strength.

Another key risk for the region in the next five years is countries continuing to be buffeted by changes in international liquidity flows. The EIU also pointed to the “deteriorating physical security” levels across much of the region and the slowing of “business-friendly” reforms following the slew of elections that have just been held, or will about to be staged.

Vital statistics

SINGAPORE: ASEAN economies are projected to expand by 4.9 per cent a year in average.

•Hong Kong by 6.5 per cent

•Taiwan by six per cent

•Japan by 4.4 per cent

•Vietnam by seven per cent

•Singapore by 5.9 per cent

•Malaysia by 5.9 per cent

•Thailand by 7.7 per cent

•Indonesia by 4.9 per cent

•Philippines by 4.5 per cent