Asian economy headed for slowdown, APEC fading in importance

Asia's regional economy should post slower growth next year because of higher oil prices, U.S. economic woes and volatile financial markets, said a think tank survey released Monday.

Photo: Asian economy headed for slowdown, APEC fading in importance

The report by the Pacific Economic Cooperation Council also said a 21-member economic cooperation grouping, which begins meeting this week in Hanoi, Vietnam, is fading in importance in the minds of regional opinion leaders.

The council said that its survey which included 370 business leaders, academics and senior officials from 21 economies should be taken seriously by the leaders attending the annual Asia-Pacific Economic Cooperation or APEC meeting on Nov. 18-19.

"APEC is in danger of becoming irrelevant to the needs of the region," said Charles Morrison, PECC international chair.

Only 42 percent of the opinion leaders surveyed agreed with the statement that "APEC is as important today as it was in 1989" when its member economies first met, the "State of the Region" report said.

The report also forecast that Asia's regional economy would grow 4.3 percent in 2007 compared to an estimated 5 percent this year. The growth would be slowed by the United States, which would be hurt by high oil prices and rising interest rates, the council said.

Other factors that might drag down short-term growth included volatile financial markets and terrorist acts, the council said.

As the U.S. economy slows down, China will step in and be an alternate source of demand, the report said. The Chinese economy should continue recording double-digit growth in 2006 and next year, it said.

Japan's economy will also continue powering forward, growing 2.2 percent in 2007, boosted by robust private consumption, reports AP.

One issue that APEC might want to seriously consider is allowing India to join the 21-member club, Morrison said.

He said 62 percent of the survey respondents believed the emerging South Asian giant should become an APEC member when the group's 10-year moratorium on membership expires next year.

India has been knocking on APEC's door since early 1990s and was turned down at least three times, most recently in 1997.