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ADB expects Thailand’s 2011 growth at 4-4.5%

Thailand could witness its economic growth slow to 4-4.5 per cent this year, given its automotive sector hit by the supply chain disruptions from Japan’s disasters and the tightened monetary stance to curb inflation, according to the Asian Development Bank.

The Manila-based bank forecasts Thailand to post a 4.5-5 per cent growth in 2012.

In the July edition of its Asia Economic Monitor released today, Thailand, Malaysia and the Phillipines are likely to see growth taper due to diminished export demand and tighter monetary policy. Indonesia stands to buck the trend with strong domestic demand expected to drive growth to 6.4 per cent in 2011, above its 6.1 per cent growth last year.

After a strong rebound in 2010, economic growth in emerging East Asia will moderate this year and in 2012 as authorities continue to battle inflation and as advanced economies try to shore up an anemic recovery, the ADB report said.

However, the risks of rising inflation leading to wage-price spiral could derail the East Asia’s growth. Other risks to the outlook include a more tepid than expected recovery in Japan and unresolved debt problems in the US and eurozone; increasing financial market volatility; and destabilizing capital flows.

ADB points out that greater exchange rate flexibility can help mitigate the effects of global commodity price surges on domestic prices.

The report forecasts aggregate GDP growth for emerging East Asia economies of 7.9 per cent in 2011 and 7.7 per cent in 2012. In 2010 aggregate growth reached 9.3 per cent.

Growth is easing in most of emerging East Asia as authorities wind down fiscal stimulus measures and tighten monetary policies to counter rising inflation, said Iwan Azis, Head of ADB’s Office of Regional Economic Integration that prepared the report.

This is actually a good thing so stronger economies like China do not overheat.

Growth in China moderated slightly to 9.5 per cent in the second quarter of 2011 from 9.7 per cent in the first quarter. Looking ahead, a slow external environment and tighter monetary stance are expected to moderate growth to more sustainable levels of 9.6 per cent for the full year and 9.2 per cent in 2012.

The highly trade-dependent Newly Industrialized Economies of Hong Kong, China; Republic of Korea; Singapore and Taipei,China should also see a return to more sustainable long- term levels of growth as a weakened external environment slows exports.

Source: The Nation

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