Asia hopes to let good times roll in 2002
Asia hopes to let good times roll in 2002
Jennifer Chen, Reuters, Singapore
Asian economies are set for better times in 2002 after months
of plummeting exports left many showing their worst performance
in years.
Still, analysts caution against being overly optimistic,
saying Asia was not completely out of the woods yet.
Among the lurking sharks that could take a bite out of
regional growth were China's emergence as a major economic force,
a weaker yen and, above all, the possibility that a U.S. recovery
will fall flat on its face.
While analysts polled by Reuters disagree on the impact of the
first two factors, most voice the opinion that if the predicted
rebound in the United States -- Asia's best consumer -- failed to
materialize in the second half of next year, then Asia would have
to brace itself for more tough times.
"How fast Asia snaps back really depends on how fast the U.S.
snaps back," said Graham Parry, regional economist at Lehman
Brothers in Tokyo.
The poll showed the two economies that are most closed --
China and India -- were expected to clock in the most impressive
rates of growth in 2002, of 7.2 percent and 5.9 percent
respectively.
How open or closed an economy is has emerged as an important
factor in determining how well a country steered through the
economic storm this year.
But the poll showed there was hope for the region's more open
economies, those hit hardest by the global downturn and drop-off
in external demand. Taiwan, Singapore and Hong Kong, all of which
are seen as facing full-year contractions this year, are expected
to be back in the black next year.
Countries that coped better this year with the global downturn
were able to draw on the strength of their domestic economies,
and analysts say that will remain a theme next year.
Korea, for instance, exceeded expectations despite its
reliance on the export-focussed electronics sector because of the
strength of its domestic economy. The poll forecast 4.2 percent
growth next year.
Still, analysts emphasize that a meaningful recovery in Korea
and elsewhere in the region still hinges on how well the United
States does next year.
Other candidates seen posing downside risks to Asia's growth
are China's entry into the World Trade Organization and the yen's
recent rapid fall.
But some analysts say concerns over both factors are
exaggerated.
Fears about China arise from the belief that the country, with
its cheap labor costs, will rob foreign investment from the rest
of Asia while pumping out much cheaper exports.
Deutsche Bank Chief Economist Michael Spencer said in a recent
report such concerns bordered on "hysteria".
"Our analysis suggest that while India, Indonesia and the
Philippines do stand to lose from China's membership in the
global club of trading nations, the cumulative loss in GDP over
the next five years will be 50 basis points or less. Other Asian
economies will benefit."