World Bank expects Asia-Pacific growth
THE World Bank forecasts the Asia-Pacific region, which remains the most important driver of the international economy, will grow at 7.9 per cent next year, despite concerns about the US and eurozone economic woes.
The Washington-based lender predicted the region - home to Australia's most important trading partners - would grow at 7.5 per cent this year.
"The East Asia and Pacific region is becoming increasingly important for the world economy, and is expected to contribute almost 40 per cent of global growth in 2012," said Bert Hofman, the World Bank's chief economist for East Asia and Pacific.
China, the region's most important economy, had the slowest pace of growth since 1999. Its GDP growth dropped by as much as 1.4 per cent from last year's 9.3 per cent to a decade-low of 7.9 per cent this year.
The World Bank attributed the slowdown to weak exports and the government's effort to cool the overheating housing sector, but there were signs of recovery in the final months of the year.
The international lender predicts the Chinese economy will grow at 8.4 per cent next year on the back of expected monetary easing, local fiscal stimulus and faster approval of large investment projects.
China's new leadership is expected to maintain a growth target of 7.5 per cent in 2013, according to China International Capital Corp, a leading local investment bank.
"Urbanisation is highlighted as the main engine for expanding domestic demand and the main channel to deepen reform," said Bob Liu, an economist at CICC. "We believe the government will push through reform in areas such as ensuring equal access to public services, the fiscal and tax system, and interest rate liberalisation."
The World Bank report also warns of growing concerns that the loose monetary policies of the US, Europe and Japan could trigger an influx of hot money into Asia that could lead to asset bubbles and excessive credit growth.
Continuing uncertainty over the eurozone sovereign debt crisis, the "fiscal cliff" in the US, and a possible decline in Chinese investment are seen as possible risks for the region's economic growth in the year ahead.