Ho Chi Minh City, Vietnam: The United Nations expects Asia’s developing economies to grow about 7% this year but a double-dip recession in the developed world could cut that by up to 1 percentage point, an assistant secretary general said on Monday.
“If there is a double dip then one would have to re-think the growth rates to some extent,” UN assistant secretary general Ajay Chhibber said.
“I think the downside for growth would be small, I mean it would be at most a 1 percentage point reduction in the overall growth rate.”
Worries about the impact of a potential double-dip recession as a result of problems in Greece, Spain and other economies are tempering some optimism over the global economy, fueled in part by weaker-than-expected May US nonfarm payrolls data.
The UN forecast was slightly more modest than projections by the Asian Development Bank (ADB) in its April Outlook 2010 report for developing Asia, a diverse group of 45 economies including China, Azerbaijan, India, Singapore and Papua New Guinea.
The ADB expects developing Asia to grow 7.5% in 2010 and 7.3% in 2011, picking up from 5.2% in 2009.
Asia’s major developing countries, such as China, India and Indonesia, would fare better in a renewed recession than more export-sensitive economies such as Taiwan, Malaysia and Singapore, Chhibber said.
“The risks are still out there, and the risks are coming not from the region but from outside the region,” he said.
“The issue on the euro is still a very big issue, and if there is a double-dip recession then several countries in the region will be affected.”
Economists generally expect the world to avoid a relapse into recession, although the next six months may be anemic as fears of Europe’s festering debt troubles refuse to subside, US jobs data disappoints and China’s red-hot economy starts to cool.
“If Europe goes into a recession it’s not automatic that the United States will also go into a recession. So, we’ll have to see how it goes and how strong the negative impacts are,” Chhibber said.