Growth in East Asia excluding Japan is likely to be 6.6% in 2006, slower than last years 6.8 and 2004s 7.5%, the World Bank said in a twice-yearly review. It forecast a further modest slowdown to 6.3 percent in 2007. It said last years impressive performance was in spite of rising oil prices the highest in 25 years rising interest rates, continued worries over the financing of the United States current account deficit and over the prospect of the spread of avian flu. Some of the risks to growth had moderated, it said, while warning of the dangers of large and rising macroeconomic imbalances. In the near term at least, growth in the US remains robust, while it is picking up in Europe and has rebounded quite strongly in Japan this last of particular relevance for the rest of East Asia, the World Bank said. Its East Asia region comprises China, Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam and a few smaller economies.
China and Vietnam led the pack, with forecasts for 2006 growth at 9.2% and 8% respectively. Although oil prices had peaked, they would still average $59 a barrel in 2006, about 10% higher than in 2005, the Bank said, and that would have some adverse effect on growth.