First quarter GDP numbers mark uneven Asian expansion
First quarter GDP numbers mark uneven Asian expansion
SINGAPORE (Dow Jones): Fresh growth figures released by Asian countries for the first quarter highlight the uneven nature of the region's economic expansion.
At the head of the class are South Korea and Taiwan, which have capitalized on their technology-rich markets to post impressive increases in gross domestic product. Close behind are Singapore and Hong Kong.
Lagging in the field are Indonesia and the Philippines, saddled with an Old Economy image, civil unrest and doubts about the pace of political and economic reform.
"It's clear that it's very much a two-tier recovery," said Friedrich Wu, chief economist at DBS Bank in Singapore.
The Asian Development Bank confirmed as much in a recent report that estimated that the four top-tier, or newly industrialized countries, would post average economic growth of 6.5 percent this year. The ADB's forecast for the remaining Asian countries, excluding Japan, was for average GDP growth of 4.6 percent in 2000.
South Korea helped solidify that scenario earlier this week when the government reported GDP expanded 12.8 percent in the first quarter, compared with a year earlier.
Taiwan last week weighed in with a 7.9 percent year-on-year rise in first quarter GDP.
While the growth rates are expected to moderate somewhat, the ADB is still forecasting solid gains this year for both countries, with a target of 7.5 percent for South Korea and 6.3 percent for Taiwan.
For Indonesia and the Philippines, the ADB is forecasting GDP to expand by 4.0 percent and 3.8 percent respectively this year, which some analysts say is overly optimistic given the erosion of the countries' stock prices and currency values since last month's ADB report.
Private forecasters are looking for 3.5 percent first-quarter growth in the Philippines when the government releases GDP data next week.
Indonesia last week reported disappointing 3.2 percent year-on-year economic growth in the first quarter, lower than the government's prediction of 4 percent to 6 percent.
Analysts said President Abdurrahman Wahid was hoping for GDP growth at the higher end of the range to help restore investor confidence in Indonesia.
The rupiah has fallen about 10 percent in value against the U.S. dollar in recent weeks due to social and political tensions and stagnated banking reforms, which have threatened to unravel Indonesia's effort at economic restructuring, Wu said.
While Wahid is calling for GDP growth of at least 5 percent in 2000, the chairman of the country's Central Statistics Bureau has revised his forecast down to 1.5 percent.
"It shows the government totally lacks coordination on the economic front," said Syetarn Hansakul, economist at WestLB Bank in Singapore.
Also of concern is the composition of growth in Indonesia and other Southeast Asian nations, analysts said. Many countries are relying too heavily on exports to the U.S. and other trading partners for growth, and not enough on domestic consumption, analysts said.
That could pose a problem for some countries if the U.S. economy slows down and its appetite for Asian imports wanes, Hansakul said.
Thailand, provided a good illustration of that, with its 5.0 percent expansion of first-quarter GDP being driven primarily by a 30.4 percent surge in exports. The ADB is forecasting 4.5 percent growth for Thailand this year.
While exports also were a major factor in South Korea's first- quarter GDP, the country saw big increases in capital investment and private consumption.
Singapore registered stronger-than-expected first-quarter GDP of 9.1 percent compared with a year earlier, the government reported earlier this week.
That prompted officials at the Ministry of Trade and Industry to boost their 2000 growth forecast range to 7.5-7.5 percent from 4.5-6.5 percent.
Malaysia, which has been distinguishing itself from the lagging Southeast Asian economies, reported Wednesday that its GDP expanded by a greater-than-expected 11.7 percent in the first quarter over the same period last year.
Forecasters predict Hong Hong's economy grew by 11.0 percent in the first quarter year-on-year, analysts said. The government is due to release the figures on Friday.