ESCAP forecasts 0.3% growth in 2003 for Japanese economy

Asian Economic News, April 21, 2003

GENEVA, April 17 Kyodo

The Japanese economy is expected to grow 0.3% this year while China is set to mark the highest growth in the Asia-Pacific region with an estimated 7.7% increase, according to a report released Thursday by a U.N. body.

The U.N. Economic and Social Commission for Asia and the Pacific (ESCAP) said in its annual report the average growth rate of the 28 developing economies in the ESCAP region is forecast at 5.4%, compared with 0.5% for Japan, Australia and New Zealand.

For China, the report cited a solid increase in exports and persistently high levels of foreign investment as principal factors propping up the country's high economic growth.

But the war on Iraq and the spread of severe acute respiratory syndrome (SARS) were not factored into the ESCAP growth projections, which were made on the basis of studies conducted in February.

In a briefing on the report, an economist of the U.N. Conference on Trade and Development (UNCTAD) pointed out that SARS-related factors could have a huge impact on the economies in the entire ESCAP region, notably Hong Kong, which is forecast to post 2.5% growth.

Hong Kong has the second largest number of reported SARS cases after mainland China, followed by Singapore, for which ESCAP forecasts growth of 4.2%.

The epidemic has already hurt tourism in Asia and had a negative impact on a number of economies in the region, having led to downward revisions in growth forecasts by research bodies, financial institutions and credit-rating agencies worldwide.

Among the consequences of the Iraq war is a possible decrease in the number of workers migrating to the Middle East from other parts of Asia, the UNCTAD economist said.