East Asian economies weakening

Freight volumes to and from East Asia are coming under pressure as economic growth in the region starts slowing. According to the latest World Bank East Asia and Pacific Economic Update released on November 22, weakening external demand is impacting on growth in developing East Asian countries. The biannual report projects that amid uncertainties in Europe and a global growth slowdown, real GDP in developing East Asia will increase by 8.2% in 2011 (4.7% if China is excluded), and by 7.8% in 2012. “Lower growth in Europe in the course of fiscal austerity and the banks’ needs to increase capital coverage would affect East Asia,” said Bert Hofman, World Bank chief economist for the East Asia and Pacific Region. According to the report, the region’s growth slow-down was more pronounced in industrial production. Exports from major regional industrial supply chains, especially electronics, have started to decline. Demand for commodities and raw materials remained strong, helping resource-rich economies maintain high levels of export and GDP growth. China is also starting to become a customer for finished goods. A shift to more consumer goods imports in China is benefiting the region’s manufacturing exporters. Looking ahead, East Asia’s growth prospects are constrained by global uncertainties and by the impact of natural disasters, according to the report.