Infrastructure problems will not deter growth, says adviser
ASIAN economies will continue to achieve appreciable growth despite the problems of infrastructure bottlenecks, labour shortage and recent trends of higher inflation, according to Hongkong Bank economic adviser Jim Wong.
Strong expansion in the region's domestic demand for massive infrastructure projects and fast expanding consumer expenditure will continue to underpin economic growth in the region.
'Asia is expected to spend US$1 trillion from now to the end of this decade,' Mr Wong said.
'Hong Kong alone is expected to spend more than HK$350 billion in the coming 10 years.
'This massive investment should also help to ease the infrastructure bottleneck in the region in the longer term.' Mr Wong was speaking at the Asian Seminar organised by the French Trade Commission.
While the problems of bottleneck may cause a short-term setback, Mr Wong believes the region will be able to handle them.
'Individual countries performance will be uneven.
'But in very broad terms, I think the region will be able to weather these difficulties and, on average, will continue to achieve appreciable growth in the medium term.' Developed countries are expected to show steady if not stronger growth in the coming years.
Increase in intra-regional trade and investment flows will stimulate growth.
Mr Wong said an important consequence of intra-regional trade was the substantial reduction in reliance of the region on developed countries as markets for their goods.
For example, Hong Kong's exports to the region have expanded at an annual average rate of 26 per cent over the past 10 years.
This compares with the 18 per cent growth in exports to the United States and Europe.
'Hong Kong now sends 45 per cent of its total exports to Asia's developing economies while only 40 per cent go to the US and western Europe as a whole,' Mr Wong said.
'As the economies of Asia grow, they will become even more specialised and create complementary roles which reflect the different stages of their development as they push to catch up with their neighbours.
'This process will certainly stimulate closer economic links among the countries of the region.' Despite the limited regional mobility of labour, the expansion in intra-regional trade and investment will help, to a certain extent, ease the problem of labour shortage in some of the countries.
He said the export-oriented economic policy, which had helped many countries in the region to take advantage of the fast growing world trade, would most likely be maintained.
The favourable economic prospects for the region would continue to attract foreign direct investments.