Asian growth forecasts cut as downturn bites

Asian growth forecasts cut as downturn bites

SINGAPORE (Reuters): The moribund global economic outlook and in particular the U.S. slowdown has seen economists lop sizable chunks off this year's growth forecasts for Asia's regional economies.

Of the 13 countries surveyed in the latest quarterly Reuters economic survey, 11 had growth forecasts pared back compared with a similar survey three months ago.

Around 126 banks, investment houses and economic analysts were surveyed by Reuters bureau around the region last week.

Almost to a man, economists cited the global economic slowdown as the major negative for export dependent Asia, although a slower than expected pick-up in domestic demand, as unemployment stays high and political uncertainty threatens stability at home, was also a major factor.

Last month the U.S. surprised with a downward revision to first quarter growth to 1.3 percent from a previous estimate of 2.0 percent as companies slashed inventories at the fastest pace in 18 years.

The survey was conducted before Japan's Q1 GDP numbers on Monday which surprised on the downside with a 0.2 percent quarter-on-quarter fall compared with expectations for a similar sized rise. Another contraction looks almost certain and two negative quarters will mean Japan is in a technical recession.

Growth forecasts for Taiwan this year were savagely cut back to 2.9 percent, well down on the March survey of 5.0 percent.

Singapore also had growth forecasts cut back sharply to 3.6 percent this year against 5.3 percent in the previous survey.

Malaysia with its capital controls grew a strong 8.5 percent last year but forecasts for 2001 have been scaled back to just 3.6 percent from 5.0 percent in the previous survey.

Even Hong Kong is still unable to flex its wasted economic muscles with some economists predicting total exports could register zero year-on-year growth for the whole of this year.

This year's growth forecast was cut back around 26 percent from the March survey to 2.8 percent.

Forecasts for Thailand have been scaled back to 2.8 percent this year, close to the lower end of the Thai central bank's own estimate of 2.5-3.5 percent.

On top of the export slowdown, Thailand is also being hurt by uncertainty over interest rate policy after the sacking of central bank chief Chatu Mongol Sonakul after a row over monetary policy.

This year's forecast for the Philippines was pared back to 2.8 percent from 3.3 percent with the global slowdown for electronic components, which account for close to 50 percent of total exports, taking its toll.

Indonesia's chronic political uncertainty saw the 2001 growth forecast cut to 3.4 percent from 3.7 percent, but analysts were hopeful the political scene would settle down later this year and allow the economy to grow at a slightly better pace in 2002.

At 4.1 percent for this year South Korea did not suffer as big a downward revision as many others because of faint signs of improved domestic spending and an expectation of a consumption- led recovery in the second half.