U.S. analysts still upbeat on Asia<\/p>\n
NEW YORK (Reuter): The \"Year of the Rat\" has turned out to be
\nnot so fat for Asian economies.<\/p>\n
For the first time in a decade, a slowdown in exports raised
\ndoubts that the Asian tigers might be losing their economic
\nprowess.<\/p>\n
Compared with the first half of 1995, exports fell in China,
\nand the growth rate notably flattened in four tiger economies --
\nSingapore, Hong Kong, Taiwan and South Korea -- as well as in
\nMalaysia, Indonesia and Thailand.<\/p>\n
At the same time, Latin American countries are pulling out of
\nrecession to post impressive year-on-year growth. Mexico stunned
\nthe market with a 7.2-percent rise in Gross Domestic Product
\n(GDP) for the second quarter.<\/p>\n
So, has the wheel of fortune turned?<\/p>\n
Pessimism about Asia is premature, U.S. economists and money
\nmanagers say. Even with growth rates moderating, Asia still
\nstands head and shoulders above other world regions. Given a
\nhistory of boom-and-bust cycles in the Latin American economies,
\nthe current recovery could be ephemeral, they say.<\/p>\n
As long as Asians continue to squirrel away a hefty chunk of
\ntheir income, U.S. investors will keep Asia ahead of other
\nemerging markets in their long-term strategies.<\/p>\n
Investment<\/p>\n
Asia provides a textbook case of savings and investments,
\nargues John Praveen, international economist at Merrill Lynch.
\n\"Higher savings lead to higher domestic investments; that, in
\nturn, boosts GDP growth and attracts foreign investments.\"<\/p>\n
Asian countries with an average savings rate above 30 percent
\nare the biggest savers in the world. Between 1990 and 1995,
\nSingapore residents saved around 48 percent, Koreans 36 percent,
\nChinese 39 percent and residents of Hong Kong 35 percent, he
\nsaid.<\/p>\n
According to International Monetary Fund (IMF) data, Asia is
\nthe only region in the emerging markets whose savings and
\ninvestment rates as a percentage of GDP continued rising, Praveen
\nsaid.<\/p>\n
Because of the sound economic fundamentals, Asia received half
\nof the US$207.4 billion in capital flows to the emerging markets
\nin 1994. Latin America got a quarter, Praveen said.<\/p>\n
With the trends of high savings and investments in place, Asia
\nwill lead the world in economic growth into the next century, he
\nsaid.<\/p>\n
For the next decade (1995-2005), the World Bank projects a
\n7.9-percent annual growth rate for East Asian countries, 5.4
\npercent for South Asian countries and 3.8 percent for Latin
\nAmerica.<\/p>\n
Uncertainty<\/p>\n
Ismail Dalla, president of Washington Asset Management, Inc,
\nsaid the high level of savings and domestic investments provides
\na cushion for the impact of a cyclical slowdown, political
\nuncertainty and currency swings.<\/p>\n
The current export slowdown was brought on in part by the
\nglobal glut of electronic goods and a collapse of semi-conductor
\nprices, he said.<\/p>\n
The countries that have moved up the value chain from sewing
\nT-shirts to making computers became vulnerable to the whims of
\nthe markets in the industrialized world, he said.<\/p>\n
South Korea, Singapore, and to a lesser extent, Taiwan,
\nThailand and Malaysia, were hard hit by the glut.<\/p>\n
The adaptability of those economies to world market demand,
\nhowever, will get them over this trough.<\/p>\n
Recent political unrest in Indonesia and speculative attacks
\non the Thai baht have not triggered disinvestment or affected the
\nability of either country to finance their current account
\ndeficit, he said.<\/p>\n
Current account deficits in the two countries result from the
\ninflux of huge foreign capital investments, whose reduction takes
\ntime as new export goods roll off the assembly line, Dalla said.<\/p>\n
Asian countries also have large reserves to defend their
\ncurrencies, he added.<\/p>",
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