Economy pushes Asia poverty down
(CNN) -- East Asia is headed for its fastest growth rate since before the 1997 Asian financial crisis, pushing poverty levels to a record low, the World Bank says.
In its twice-yearly look at the region's economies, the bank says average growth this year excluding Japan should top 7 percent, led by 9.0 percent-plus in China.
That is more than 1 percentage point above last year's 5.9 percent growth rate.
It says this year's strong performance has lifted 40 million East Asians out of poverty, mostly in China, Indonesia, Thailand and Vietnam.
"We are estimating that by the end of this year, the number of people living on less than $2 a day will be around one-third of the region's population," the bank's East Asia and Pacific regional vice president Jemal-ud-din Kassum said in a statement released in Manila Tuesday.
"Even excluding China, the absolute number of poor would be at their lowest level ever, finally overcoming the higher poverty created by the 1997 crisis," he said.
The bank's estimated number of those below the $2 poverty line this year is down to 636 million people, or about 34 percent, compared with 890 million or 50 percent in 1999.
The bank expects strong demand from China, along with the global recovery and a rebound in high-tech industries will propel regional exports to their best performance since 1988.
Strong commodity prices and an investment recovery also add to economic optimism this year.
But the bank said that despite these successes, there was concern that the outlook for 2005 was less favorable and more uncertain, with overall growth likely to average 5.9 percent -- the same as last year.
It cited the spike in oil prices, slower growth in rich countries and downturns in the high-tech and commodity cycles as unfavorable trends for the region.
It said the region's oil import bill would be up by $25 billion this year, reducing the incomes of the majority of regional economies that are net energy importers.
"Although 2004 has been a strong year, recent data also suggest that the recovery in East Asia has peaked, and that economic activity is shifting into lower gear," the bank's regional chief economist Homi Kharas said.
Another factor is the situation in China, where the authorities are using a range of administrative controls to try to achieve an economic "soft landing".
The bank said the "quality of adjustment" in China might improve now that interest rate caps have been removed.
China raised interest rates late last month, with expectations of more to come.
