Hong Kong, Malaysia to join Singapore, Taiwan in recession: ABN Amro
Hong Kong, Malaysia to join Singapore, Taiwan in recession: ABN Amro
SINGAPORE (AFP): Hong Kong and Malaysia will join Singapore
and Taiwan in recession this year as a result of fallout from the
terrorist attacks in the United States, Dutch-based bank ABN Amro
said Monday.
The Sept.11 attacks on the World Trade Center in New York and
the U.S.' military headquarters at the Pentagon in Washington as
well as an imminent U.S. recession have prompted a "massive
downgrade" for gross domestic product (GDP) growth in Asia, the
bank said.
"The tragedy in the U.S. on 11 Sept. and the imminent
recession in the U.S. will extend Asia's recession for at least
another two quarters," it said in a report.
"This prompts us to slash our 2002 Asian economic growth
forecast significantly, by 200-400 basis points in most
countries. Some Asian countries will have zero or close to zero
growth again next year," it said.
Like most other institutions, ABN Amro had earlier projected a
recovery by late this year.
In its revised forecast, however, the bank projected Hong
Kong's economy to contract 0.2 percent this year instead of
having zero growth.
For 2002, Hong Kong would experience zero growth, down from
the bank's earlier projection of a 3.5 percent expansion.
Malaysia's GDP was also tipped to contract 0.4 percent this
year from the original projection of 0.7 percent growth, ABN Amro
said. For next year, growth was pared back to 1.4 percent from
1.7 percent.
The two economies would thus join Singapore and Taiwan in
recession this year.
Singapore's economy is seen falling by a steeper 2.3 percent
this year, from the original 1.5 percent, the bank said. In 2002,
GDP is expected to grow by a slower 0.4 percent instead of 4.4
percent.
The Taiwan economy was forecast to shrink 3.0 percent instead
of 2.3 percent this year. In 2002, GDP is seen growing by a mere
0.2 percent rather than 3.4 percent, the bank said.
ABN Amro trimmed its prediction for China this year to 7.2
percent GDP growth from 7.5 and to 7.0 percent for next year
instead of 8.5.
South Korea's GDP is to grow 1.3 percent this year, down from
the original forecast of 2.7 percent. In 2002, GDP was set to
expand by 1.6 percent, rather than 5.5 percent.
The U.S. economy was expected to undergo a "sharp and short
recession," the bank said, with real GDP contracting by 2.9
percent quarter-on-quarter in the three months to December and
1.4 percent in the March 2002 quarter.
It was expected to be followed by a "modest recovery" in the
second quarter of 2002 and a "sharp rebound" by the third
quarter.
The bank warned a U.S. recession was likely to affect consumer
spending, spelling more bad news for Asia's export-oriented
economies.
ABN Amro noted the current slump of exports to the U.S. market
was caused by a fall in electronics demand.
However "if U.S. consumption starts to drop, we are likely to
see a more broad-based decline in exports than Asia is currently
experiencing," it said.