Roundup: PEO Economies Forecast to Further GrowThe weighted average economic growth of the Pacific Economic Outlook (PEO) economies in 2000 and 2001 is forecast to exceed the 3.9 percent rate recorded in 1999 to reach 4.6 percent and 4.0 percent, respectively, according to a report released by the Pacific Economic Cooperation Council (PECC) Tuesday.There are 20 PEO economies, namely, Australia, Canada, Chile, China, Colombia, Ecuador, China's Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Peru, Philippines, Singapore, Taiwan, Thailand, the United States and Vietnam. Slower growth in the United Sates, at 4.1 percent and 2.7 percent in 2000 and 2001, respectively, is salient among the forecasts made in the report. East Asia as a whole will have substantially stronger performance in 2000 than over the past year, before easing a little in 2001 as the exceptional opportunities of a recovery period are exhausted. PEO Latin America will be much stronger in 2000, before also easing somewhat in 2001. Japan is expected to have by far the slowest growth in the PEO economies in both 2000 and 2001, at 1.2 percent and 2.1 percent, respectively. However, these numbers are not particularly low for contemporary Japan, because it is not reasonable to expect average rates of growth above this range over the foreseeable futures, as demographic factors limit the contribution of growth in labor supply, said the report. China is predicted to post the biggest growth in 2000 and 2001, with 7.3 percent and 7.6 percent, respectively. The spectacular growth rates in recovery from recession in Hong Kong and South Korea will ease to more sustainable levels in 2001. Australia and Canada are expected to ease moderately, and less than the United states. Mexico's growth will accelerate in 2000 and remain strong in 2001, despite the easing in the United States. The PECC forecasters expect strong growth throughout the PEO economies to be associated with an acceleration of inflation in each of 2000 and 2001 to weighted averages of 2.3 percent and 2.5 percent, respectively. These are still not high levels, even in the second year. However, they will require a policy response to control continued acceleration beyond the forecast period, said the report. The deflation that has been experienced over the past couple of years in China, Hong Kong and Japan will cease this year in China, and be at a negligible level next year in Japan. The PECC was founded in 1980 to serve as a forum to discuss cooperation and policy coordination in areas that would promote economic growth and development in the Pacific region. |
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