Geneva, April 18:

China will underpin Asia-Pacific economic growth in 2007 but could face social tensions if unchecked expansion causes its economy to overheat, a United Nations report stated today.

Economies in the Asia-Pacific region are set to grow by 7.4 per cent in 2007, underpinned by continuing expansion in China, India and Japan, the UN said in its ‘Economic and Social Survey of Asia and the Pacific 2007’. The growth rate is slower than the 7.9 per cent recorded in 2006, due to an expected slowdown in the US and Europe, along with falling commodity prices.

“As the international economic environment weakens, momentum in the region is expected to come from China, India and Japan. Together, these three economies contribute over 60 per cent of the GDP of the Asia-Pacific region and close to 45 per cent of imports,” the report stated.

Chinese growth is seen at about 9.9 per cent in 2007, down from 10.7 per cent in 2006, with exports and investment still the driving forces. “There is a risk of further acceleration in investment growth resulting in overheating of the Chinese economy,” the report warned.

If Chinese gross domestic product (GDP) growth declined to seven per cent, net exports in developing Asian economies would fall by almost two percentage points and GDP growth by 0.2 percentage points, it predicted.

UN economist Cape Kasahara said that such a development would also have political repercussions as the social tensions caused by China’s economic transformation come to the fore. “Privatisation of the public-owned enterprises is creating disruptions of the public fibres,” he noted, with income distribution, environmental pollution and unemployment also causing tensions.

China’s exposure to foreign ideologies and influences within a globalised environment could also have far-reaching consequences for the country’s authoritarian government, he added. “As people become more and more aware of the international environment and are having a more sensitised, democratised concept, people may start questioning and maybe 1989 could be revisited.”

India is expected to grow by nine per cent led by services and accelerating industrial production, while Japanese growth is seen falling to 1.9 per cent due to ongoing fiscal consolidation, exchange rate appreciation and the US slowdown, it stated.

Inflation is seen as less of a problem than in previous years due to a fall in oil prices and tight monetary policies in the region. Exchange rate fluctuations are by contrast a key area of concern, after many Asian currencies appreciated significantly against the US dollar in 2006 - a trend which is set to continue in the current year.

A moderate decline in global electronics demand in 2007 may dampen the region’s prospects, it added.

Gender inequality costs

NEW DELHI: Huge differences in the way men and women are treated is costing the Asia-Pacific region billions of dollars a year, the United Nations’ social and economic arm said. “Appalling disparities remain” in the region despite some progress, the UN Economic and Social Commission for Asia and the Pacific (UNESCAP) said. Restrictions on women’s access to employment opportunities cost the region $42 billion to $47 billion ollars annually while $16 to $30 billion a year are lost because of gender gaps in education. India, which has the lowest female work force participation, could add a full percentage point a year to its annual growth rate if the rate of women in work reached parity with the US. — AFP

Pentagon hires Wolfowitz’s friend

WASHINGTON: The Defence Department directed a contractor in 2003 to hire a World Bank employee and companion of Paul Wolfowitz, the Pentagon’s No 2 official at the time, to do work in Iraq.

The contractor, Science Applications International Corp, also known as SAIC, was directed by the office of the secretary of defence for policy to enter into a subcontract with Shaha Riza. At the time of the contract, Douglas Feith headed the policy office and Wolfowitz was deputy defence secretary. Wolfowitz, a key architect of the Iraq war, left the Pentagon in 2005 to become president of the World Bank. — AP