'Asia set to outperform rest of world in 2003'
'Asia set to outperform rest of world in 2003'
Agence France-Presse, Singapore
Asia is set to outperform the rest of the world in terms of
economic growth next year, British-based Standard Chartered Bank
said in a report Thursday.
A combination of "the Chinese magnet" and the fact that Asian
governments and central banks had wizened up from last year's
global slump would pay dividends, although the benefits may not
be immediately evident, the bank said.
On an absolute basis, the outlook for the G3 economies
remained crucial with modest growth expected in the United
States, Europe and Japan, but Asia's "outperformance" in 2002 is
likely to continue, it said.
"As uncertainty about the economic outlook diminishes,
governments, eying fiscal sustainability, may want to take their
foot off the accelerator.
"However, there are indications that Asian governments are
rightly still cautious about relying too heavily on external
demand."
The report cited Thailand's decision to cut taxes for the poor
and push through other plans to spur consumer spending, while the
Philippines revised its budget forecasts to allow for a wider
deficit.
Asia also enjoyed the benefit of China as a key driver of the
region's economic activity, Standard Chartered said, noting the
recent Communist Party Congress spoke of quadrupling the size of
its economy in the next 18 years.
"While one can question the attainability of this goal... a
mere doubling in the size of the Chinese economy would be more
than equivalent to adding two more Koreas to the size of the
region's economy," it said.
The growth in exports of China for Northeast Asia is
increasingly becoming a factor in countering weakness in the G3
markets.
But the report cautioned that while a strong China was in the
regional interest, it was not just a source of demand but also an
increasingly powerful export engine.
However, while forecasting an improved outlook for 2003, the
bank said the full benefits of increased economic activity are
unlikely to be felt by companies or individuals.
"The world is still suffering from significant excess capacity
such that companies will continue to have limited pricing power,"
the report said.
"Meanwhile, the resultant focus on productivity increases
means that the regions's labor markets are still vulnerable,
which may somewhat dampen consumer sentiment."
Of the major Asian economies, the report estimated economic
growth for 2003 in China at 7.4 percent, ahead of Malaysia (6.0
percent), South Korea (5.6 percent), India (5.5 percent),
Singapore (5.2 percent), with Hong Kong and Indonesia both at 3.5
percent.
By comparison, U.S. growth was put at 3.0 percent, ahead of
Japan at 2.2 percent and Europe on an even 1.0 percent.