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.