Asian economies will face a more difficult year in 2005, with problems in China leading the way, according to analysts gathered together during a regional economic forum held recently organized by Malaysia's National Economic Action Council.

"China's growth consolidation likely isn't enough to avoid overheating without more moves to tighter macro economic policies leave to higher interest rates and a stronger currency," said Donald Hanna, managing director of Hong Kong-based Citigroup Global Markets Asia. The global interest rates rise, and as the interest rates in China rise, it'll be more difficult for China to sustain high levels of personal spending and credit growth.

P.K. Basu, managing director of Singapore-based Robust Economic Analysis, said next year will be slightly more difficult than 2004 and 2003, primarily because the global economy has had a spectacular 2004. The Manila-based Asian Development Bank (ADB) has forecast a sharp drop in economic growth for 'Developing Asia' from an estimated 7.2 percent in 2004 to 6.3 percent in 2005. However, prospects for exports among the Association of Southeast Asian Nation (ASEAN) member countries remained good, which would "help ensure that the ASEAN region is one of the stronger regions in the world economy next year," Basu said.

By: DocMemory
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