The overall aggregate real GDP growth of the Asia-Pacific Economic Cooperation (APEC) member economies will fall to 3.5 percent in 2005 due to high oil prices, rising domestic prices and external imbalances, the APEC Economic Committee (EC) projected in its annual economic outlook released Monday in Busan.

The report also warned an increasing threat of higher inflation due mainly to higher energy prices near the end of 2005.

The Asia-Pacific region's economy continued its strong expansion in 2005 although the pace of growth slowed after its peak in 2004 when annual overall aggregate real GDP growth of APEC member economies was 4.3 percent, said the EC report.

The medium-long term projection of APEC's annual growth is 3.6 percent over the period of 2006-2010, said the report.

"APEC economies showed relatively more balanced growth rate and are increasingly dependent on US and Chinese economic expansion," the report said. "The expansion of APEC economies was mostly underpinned by strong domestic demand and favorable external markets.

The strong economic performance of Asian emerging markets in 2004 was also backed by a market revival of business investment, combined with continuing or strengthening consumption demand, particularly in Southeast Asian economies.

While the Northeast Asian region is optimistic about economic growth in the medium term, Canada, New Zealand, Russia and Peru expect moderate growth during the same period, the report said.

"In Southeast Asia, economies expressed moderately favorable expectations for economic growth thanks to favorable external environments, continued strong domestic demand and domestic industrial and macroeconomic policies," it added.

Most currencies of APEC economies with few exceptions gained value against the US dollar until they began to stabilize at the beginning of 2005. "Nearing the end of 2005, there is an increasing threat of higher inflation due mainly to higher energy prices," the report warned.

The APEC Economic Outlook, which usually submitted at the annual APEC meeting week in October or November, aggregates APEC member economies' economic data in an effort to examine both individual member economies' trends as well as regional performance.

The 21 APEC member economies are: Australia, Brunei, Canada, Chile, China, China's Hong Kong, Chinese Taipei, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Thailand, the United States and Vietnam.

Source: Xinhua