PROSPECTS FOR ASIAN ECONOMIES LOOK BRIGHTER

       Asian economies will expand at a faster-than-expected pace this year and next as growth in China, India and Indonesia strengthens, the Asian Development Bank said.
       Asia, excluding Japan, will grow 3.9 per cent this year, faster than a March estimate of 3.4 per cent, the Manila-based institution said in a report yesterday. Growth may strengthen in 2010 to 6.4 per cent, it said.
       The region is leading the world's emergence from its deepest recession since the 1930s after governments boosted spending, cut taxes and slashed interest rates, averting a spiral into another Great Depression. Withdrawing these measures too early may derail the global recovery and lead to a protracted slowdown, the ADB said.
       "This is not the time for an exit from expansionary policies-the recovery remains fragile and subject to serious downside risks," the bank said in its Asian Development Outlook 2009 Update.
"Once impetus from fiscal stimulus packages wears off, it will be essential that domestic consumption and private investment take over as drivers of growth."
       Confidence in the world economy held at a record high this month after reports suggested the recession was over and officials said they wouldn't rush to withdraw stimulus, a Bloomberg survey of users on six continents showed on September 17.
       EXPORT ECONOMIES
       Recovery in Asia also hinges on the revival of growth in Europe and the US, as this will affect the region's export-dependent economies, the ADB said. Federal Reserve Chairman Ben Bernanke said last week that the recession in the US had probably ended.
       "Any slippage in the major industrial economies' recovery would delay the region's return to its long-term growth path," the ADB said.
       Inflation in Asia may average 1.5 per cent this year compared with a March forecast of 2.4 per cent, the bank said. It forecast inflation to accelerate to 3.4 per cent next year as growth strengthens.
       "Central banks in the region will therefore want to put a tight watch on monetary policies so as not to encourage asset bubbles that would inflate prices to levels that are no longer justified by fundamentals," it added.
       South Korea's financial regulator said earlier this month it would tighten restricitons on mortgages for people buying homes in the capital and surrounding areas to slow the increase in lending.
       CHINA AND INDIA
       China will expand 8.2 per cent this year, compared with the March forecast of 7 per cent, the ADB said. India's economy will grow 6 per cent, up one percentage point from the earlier estimate, it said.
       China's August industrial production increased 12.3 per cent from a year earlier, the most since the same month in 2008, while India's industrial production increased for a seventh straight month in July. China's expansion follows a 4-trillion-yuan (Bt19.7 trillion) stimulus package, record lending and a rebound in property investment and sales that have countered a slump in exports.
       The ADB forecast Indonesia's economy will expand 4.3 per cent this year, compared with the March estimate of 3.6 per cent. South Korea's economy will shrink 2 per cent this year, compared with the earlier predicted 3-per-cent contraction, it said.
       In Southeast Asia, the ADB forecasts the economies of Thailand, Malaysia and Singapore will shrink this year, dragging growth in the region to 0.1 per cent in 2009. The East Asian economies of Taiwan and Hong Kong will also contract, it said.