Asia will grow with 7.1% in 2014 according to the World Bank forecast

Asia industryThe World Bank (WB) estimates that this year recovering demand from industrialized countries will stimulate economic growth in the export-dependent countries in Asia. According to the international financial institution developing Asian economies will grow by an average 7.1% this year. In practice, the bank forecast remains that in 2013 China will increase its gross domestic product (GDP) of 7.6% instead of 7.7%, as expected by the World Bank in 2013. According to the latest research by Finweek Journal, the report by international lenders indicates that the process of reducing the size of asset purchases by the US Federal Reserve, which began this year, which should after a certain time to raise the yield on US Treasuries, it has caused great losses Asian markets.
“The strong global economy growth this year will help the enlargement of the region at a relatively steady pace until he adjusts to tighter global financial conditions”, said Vice President of the World Bank for the East Asia Axel van Trotsenburg.
However, developing Asia grows much slower than the average growth rate of 8% in 2008-2013 WB believes that the slower return to growth in developed economies and a rapid rise in interest rates in the world will mean that Asia may not achieve the set goals of economic growth. The financial institution highlights the high levels of household debt in countries such as Indonesia, Thailand and Malaysia. Obligations could increase if interest rates soar worldwide.
There are other risks. These include reversal of foreign capital flows. Last summer, when the Fed first hinted that it would gradually withdraw monetary stimulus, foreign funds retreated from Asia, dragging markets. According to WB flexible exchange rates in the region of Asia to help cope with these shocks. There is an outflow of capital, rates fall, decreasing imports and increasing current account deficits of countries. Moreover, most countries have adequate reserves with which to deal with the temporary commercial and external shocks, noted more experts Bank.
According to many economists the revival of the world economy this year has not been sensed in Asia, as expected. It is unclear whether the strong growth of USA and Europe emerge from the recession last year due to increased demand for Asian goods.
The exports of South Korea, which is a leading exporter of IT and electronic equipment in the first quarter of 2014 grew by only 2.2% annually, for example. Few sectors have done better such as the export of parts for smartphones. In the first two months of the year the total exports to Taiwan increased by 0.4% on an annual basis, although exports of electronic components jumped 12.7%, according to CLSA.
According to the World Bank long-term Asian economies need to accelerate structural reforms to boost potential growth rates.

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