MercoPress. South Atlantic News Agency

East Asia and Pacific region growth rate forecasted to double Latinamerica’s

Latinamerica’s is projected to grow 3.1% in 2010 and 3.6% in 2011, says World Bank

According to the World Bank Global Economic Prospects 2010, regional outlook, the East Asia and Pacific region led the rebound in the global economy last year, reflecting robust fiscal policy steps and strong domestic demand.

China, with 8.4% growth last year, was an engine for regional growth, a pattern expected to continue this year, with Chinese GDP projected to grow 9%.

GDP in the region is estimated to have increased 6.8% in 2009 and is forecast to edge up 8.1% this year. Capital flows to the region are returning and local financial market developments have provided further impetus to the recovery.

Continuing excess capacity in manufacturing and only moderate advances in world trade growth will restrain GDP growth from accelerating much faster than 8.2% in 2011.

Stronger fundamentals helped the Latin America and the Caribbean region weather this crisis much better than in the past. Following an estimated 2.6% drop in GDP last year, regional output is projected to increase by 3.1% in 2010 and 3.6% in 2011, but weaker investment will keep growth from attaining boom year levels.

Remittances and to some extent tourism (both important sources of external finance for Caribbean countries) are expected to recover only modestly in the 2010–11 period, undermined by weak labour market conditions in the United States and other high-income countries.

Key challenges include the winding down of stimulus measures; providing for the unemployed in a fiscally sustainable manner; and maintaining openness towards international trade and investment.

The Middle East and North Africa region was less sharply impacted by the crisis than other regions, with overall GDP growth slowing to 2.9% in 2009. Growth among oil-importing developing countries was an estimated 4.7% in 2009. Among developing oil-exporters, growth eased to 1.6%, reflecting production restraint and reduced oil revenues.

For the region as a whole, GDP is projected to grow 3.7% in 2010 and 4.4% by 2011. The forecast for recovery is premised on a revival in global oil demand, stabilizing oil prices and a rebound in key export markets. Despite a gradual withdrawal of fiscal stimulus measures, moderate advances in consumer and capital spending are expected to underpin firmer growth.

South Asia appears to have escaped the worst effects of the crisis. Nevertheless the estimated 5.7% GDP growth in 2009 (the same growth rate as in 2008) represents a marked deceleration from the boom period, largely driven by a pronounced fall-off in investment growth.

Private capital inflows—a key transmission channel of the crisis—are less significant as a share of South Asia’s GDP (particularly foreign direct investment), compared with most other regions. Also, domestic demand in the region was relatively resilient, having been cushioned by counter-cyclical macroeconomic policies.

Growth is expected to rebound to 6.9 and 7.4% in 2010 and 2011.