Asia's growth outlook is bright

A panda ice sculpture is pictured with the Swiss and Chinese flags during the launch of the Swiss-Sino Year of Tourism in Davos on Tuesday. [Photo/Agencies]

A United Nations report said Asia's economic outlook for this year is strong, despite slowing global growth due to sluggish international trade and investment.

The world economy grew 2.2 percent last year, the slowest pace since the end of the 2008 financial crisis. Britain's plan to leave the European Union and the election of Donald Trump as US president are adding to uncertainty.

Despite a slowdown in China, Asia remains a "bright spot", the authors of the UN Economic and Social Commission for Asia and the Pacific said in the report, released on Tuesday.

Strong consumer demand and government spending helped make up for weak exports, as East and South Asia grew at a steady pace of 5.7 percent last year, level with the year before.

"Most economies in East Asia and South Asia, led by China and India, saw robust growth driven by strong expansion of domestic demand," the report said.

South Asia is the world's fastest-growing region, with 6.7 percent growth this year projected to reach 6.9 percent next year and in 2018. India's economy is projected to expand by 7.7 percent and 7.6 percent this year and in 2018, respectively. Since its exports are small relative to the size of its economy, India is largely insulated from global trade volatility.

China is making progress in shifting from export-oriented growth to tapping domestic demand, the report said. It estimated the Chinese economy grew 6.6 percent last year, despite a 6.8 percent contraction in exports for the year, as reported by the government.

Potential dispute

Services are growing in importance in China, according to Sompob Manarangsan, an economics professor at Thailand's Chulalongkorn University. "There's still quite some room for China to further develop by using its own domestic demand," he said.

Trump has railed against existing free trade agreements and threatened to impose punitive tariffs on some imports at a time when Asian economies have been gradually committing to wider opening of their own markets.

Sompob said China looked set to counter protectionist moves, given its stake in global trade.

"You see Xi Jinping, the president of China, going to join Davos to show how much he supports the market-based economy," Sompob said, referring to the annual World Economic Forum gathering of global political and economic leaders in Switzerland this week. "China from now on is going to perform against what Donald Trump is going to do."

Xi, the first Chinese president to attend Davos, said in a speech on Tuesday that any moves to turn back to protectionism will run against historical trends.

"Whether you like it or not, the global economy is a big ocean that you cannot escape from. Any attempt to cut off the flow of capital, technologies, products, industries and people between economies, and channel the waters in the ocean back into isolated lakes and creeks is simply not possible." Xi said.

Agencies