Asia GDP forecasts cut as U.S. economic beacon dims
Asia GDP forecasts cut as U.S. economic beacon dims
SINGAPORE (Reuters): Economists have pared growth forecasts
for Asia as its number one customer, the United States, takes a
cyclical downturn after a decade of growth and as demand for
electronic goods withers in the post-internet-mania era, Reuters
latest quarterly economic survey showed.
With few exceptions, estimates for 2001 were revised down
compared with a similar survey three months ago.
The region-wide study of over 120 analysts also showed growth
rates are anticipated to be well down on those enjoyed in 2000
when the economic bounce saw gross domestic product in some
countries getting back to pre-crisis levels, in terms of the
headline numbers at least.
"Economic reports and the direction of GDP forecast revisions
highlight that downside uncertainties to the near-term growth
outlook remain large," said Bernhard Eschweiler, Asia-Pacific
head of economic and market research at JP Morgan.
"Recession in the first half of the year is a serious risk for
the United States, Japan, Korea and Taiwan, while a recovery in
the second half of the year is only a forecast."
Since the last poll in December it has become increasingly
clear U.S. economic growth is slowing and maybe even grinding to
a halt. Growth prospects have been pared back pretty much
globally as sliding stock markets strip away the wealth effect on
not only companies, but individuals as well.
Forecasts for Singapore and Malaysia were pared sharply to 5.3
percent and 5.0 percent respectively with slowing demand for
electronic goods curtailing exports and therefore GDP.
Singapore is coming down from the high base of 9.9 percent
growth in 2000, with the fourth quarter last year alone showing
an 11 percent rise from Q4 1999.
But the curtain was raised on a soft first half of the year at
least, with a 9.9 percent drop in January's manufacturing output,
signaling coming weakness in the key electronics products sector.
It is a similar picture in Malaysia where a cooling
manufacturing sector will limit growth as demand for electronic
goods slows further.
In the June/July 2000/01 fiscal year growth forecasts for
Australia were revised back quite sharply to just 2.1 percent,
well down on the previous year's 4.3 percent and way off the
government's 4.0 percent expectation.
Thailand took a hit with growth there this year revised down
to 3.5 percent from December's 4.3 percent. Analysts said the
jury was still out with regard to Prime Minister Thaksin
Shinawatra's new administration.
There was broad-based gloom elsewhere with the 3.8 forecast
for Hong Kong not far ahead of the 3.7 percent expected in
Indonesia this year.
"We are more negative on the trade picture than before," said
HSBC chief economist George Leung, who recently revised his 2001
year-on-year forecast to 2.2 percent from 3.4 percent.
"Originally we thought China would be a strong support to Hong
Kong but we revised down our (Hong Kong) export numbers in view
of poor demand."
The key reason Hong Kong was likely to see any growth at all
this year was because the government plans to spend two percent
more of GDP in fiscal 2001/02 than in the current fiscal year.
Hong Kong grew 10.5 percent in real terms in 2000.
In South Korea, where electronics account for around 35
percent of exports, growth is now seen at 4.2 percent this year
against a previous expectation of 5.0 percent.
Somewhat ironically the upshot of the political problems that
made the Philippines such an economic pariah at the end of last
year have seen growth expectations for the country improve
slightly.
The ousting of Estrada has led to a more stable peso and
economic variables like interest rates have settled down.
Analysts are agreed President Gloria Arroyo administration has
thus far made the previous administration's efforts look like a
bad movie.