Asian economy to grow slower in 2003

Asian economy to grow slower in 2003

Deutshe Presse Agentur, Singapore

Average economic growth in Asia is forecast at 6.1 percent this year, dropping from 6.6 percent in 2002, amid slim hopes of a convincing turnaround in the global economy, according to Goldman Sachs' latest predictions released on Friday.

"The U.S. will require another year to adjust both real and financial imbalances following the bursting of the bubble," said the investment bank's Asia-Pacific Economic Analyst report.

"Meanwhile, little help will be forthcoming from the E.U. and Japan as both will be held back by structural weaknesses and policy inertia," it added.

Even the hot Chinese economy, running at 8 percent last year, was expected to ease to a "more sustainable, though still robust" pace of 7.2 percent in 2003, Goldman Sachs said.

The U.S. investment bank is relatively more positive about the outlook for Malaysia, Indonesia and Thailand, in particular.

The consumer cycle is likely to stay strong in those countries, it said, and there are emerging signs of a rebound in fixed investments.

"In short, domestic demand will continue to provide an offset to potentially weak external demand," Goldman Sachs said. "The Association of Southeast Asian Nations (ASEAN) thus will be more defensive," it added.

Malaysia is likely to post sub-par growth of 5.1 percent while Indonesia is pegged at 4.5 percent and Thailand at 5.7 percent.

Singapore is seen as trailing many Asian economies, coming in barely ahead of Hong Kong, Taiwan and the Philippines.

Growth for the city-state is forecast at 3.8 percent against Hong Kong's 3, Taiwan's 3.6 and the Philippines' 3.6 percent, according to the investment bank.

The report sees little sign of an independent source of domestic demand growth in Hong Kong, Taiwan and Singapore.

As for South Korea, "consumers have begun showing fatigue after running hard in the last couple of years," Goldman said.

Goldman is more upbeat about the region's prospects for next year as it sees the Organization for Economic Cooperation and Development, a bloc of the world's 30 largest economies, regain its growth momentum.

It cautioned, however, against the uncertainty linked with a possible U.S.-Iraq war that could upset an improved scenario.