Asia to Lead Global Economic Growth in 2010
The United Nations says the world economy is on the mend. In its annual economic report released Wednesday, the UN predicts a global growth rate of 2.4 percent in 2010 with East and South Asia taking the lead. But the organization warns conditions for sustained growth around the world remain fragile.
The UN report says the world's economy is beginning to show signs of modest recovery. Equity markets are on the rebound, international trade and industrial production are rising and banks are starting to lend again. It's an economic revival driven in large part by massive stimulus measures around the world.
"In Hong Kong, we have spent some US$11.2 billion on economic stimulus measures. That is equivalent to about 5.2 percent of our GDP. We have taken extraordinary steps to guarantee bank deposits, support small and medium enterprises and provide additional capital to the banking sector if required," said Hong Kong chief executive Donald Tsang. His comments came at the start of the Asian Financial Forum in Hong Kong, where international delegates and representatives of the International Monetary Fund met to discuss the region's economic future.
"The transformation has been huge and the share of Asia in the global economy has raised a lot, helping hundreds of millions escape poverty. And in front of us, we have the possibility of sustained growth, helping billion, one billion people to get out of poverty,' said IMF director Dominique Strauss-Kahn, who noted the crucial role Asia is playing in a post recessionary world.
The world economy has shown steady improvement since the second quarter of 2009, but Strauss-Kahn says the recovery has been uneven. China grew at a blistering pace of 10.7 percent in the final quarter of 2009, but the government has since placed curbs on lending to reduce inflation and cool down an overheated economy. In contrast, Japan is worried deflation and weak demand could push the economy back into recession.
"Macro-economic situation has been very sluggish for last couple of decades. Japan hasn't seen, in Japan, we haven't seen the actual nominal GDP growth for as long as two decades," said Takashi Hibino, head of brokerage firm, Daiwa Securities.
Forecasts call for East Asia to grow 6.7 percent this year, followed by South Asia, -- at 5.5 percent in 2010.
The IMF expects growth to accelerate in the poorest regions in Africa as the global recession eases.
And the U.S. and the 16 nation Eurozone can expect modest but continued expansion even as job growth continues to lag in the new year.