Most of Asia on track for strong growth: Polls
Most of Asia on track for strong growth: Polls
SINGAPORE (Reuters): Growth forecasts for much of Asia have been raised once again after a generally stellar first half performance, although a few nations with persistent domestic problems bucked the trend.
Reuters polls on 13 economies, excluding Japan, showed that strong trade performance, recovering domestic consumption and financial reforms have put most countries in the region on track for solid growth in gross domestic product (GDP) in 2000.
Economists raised growth forecasts for Hong Kong, Singapore, Australia, China, the Philippines, Malaysia and Sri Lanka due to a resurgence in trade and domestic consumption.
But uncertainties ranging from slumping currencies to weak domestic demand and social unrest prompted economists to trim their forecasts for New Zealand, Thailand and Indonesia, respectively.
The growth outlooks for India, South Korea and Taiwan suffered minor downward revisions.
However, economists said Asia's strong recovery run would slow considerably by the end of this year or in 2001 as the U.S. economy cools, the effects of higher oil prices kick in and their economic base widens.
Hong Kong and Singapore, Asia's favorite economies outside Japan, drew the largest upward revisions in growth forecasts after exceeding expectations in the first half of the year.
Hong Kong's GDP is expected to grow by 9.2 percent in 2000 and 4.4 percent in 2001 over previous years against 5.8 percent and 4.5 percent forecast by the economists in June. The government has forecast 8.5 percent growth in 2000.
Hong Kong's double-digit growth in the first and second quarters was partly due to comparisons with data in early 1999 when it was still reeling from its worst recession in a decade.
Growth in 2001 would be underpinned by foreign investment flows once China joined the World Trade Organization and the likely emergence of inflation as consumer demand picked up in the second half of 2001, economists said.
Singapore's economy is forecast to grow by 8.4 percent this year and 6.7 percent in 2001. This compares with a forecast of 7.9 percent in August and an official growth forecast of 7.5 to 8.5 percent for this year,
The Ministry of Trade and Industry (MTI) revised its forecast upwards in August from 5.5 to 7.5 percent, after stellar second quarter GDP growth of 8.0 percent.
Economists said growth rates in Malaysia, Australia, China, Sri Lanka and the Philippines will also rise due to stronger trade and higher domestic consumption.
Australia's GDP will expand by 4.0 percent in 2000/2001 (July/June) before easing to 3.6 percent in 2001/2002, against a government 2000/01 forecast of 3.75 percent and projections of 3.7 percent in the previous poll.
In China, a rebound in domestic consumption and a steady increase in government investment were expected to spur higher economic growth of 7.85 percent year-on-year in 2000 and 7.89 percent in 2001.
This could allow China to snap a seven-year streak of slowing growth this year, economists said.
Philippine growth this year is being driven by exports, particularly electronics, with domestic consumption and investment likely to start contributing to growth only in 2001.
The Malaysian economy will be supported by strong growth in the manufacturing sector, which expanded by 24 percent year-on- year in July, and consequently high exports.
Economists have trimmed growth expectations for New Zealand because of rising interest rates, a sliding exchange rate and a deep trough in business and consumer confidence. The average growth projections for the calendar year slipped to 4.0 percent from 4.5 percent in the June poll.
Indonesia's economy is expected to grow by 4.0 percent in 2000 and 4.31 percent in 2001 but its recovery will be held back by domestic strife and slow reforms, analysts said.
The June poll had estimated GDP growth of 4.06 percent and 5.15 percent, respectively.
The market is waiting to see how President Abdurrahman Wahid's new cabinet performs, especially on corporate debt and bank restructuring. The cabinet was sworn in a few weeks ago. Analysts also have scaled back their forecasts for Thai economic growth as doubts grow over the strength of the country's recovery.
The poll shows the average forecast for Thai gross domestic product growth at 4.84 percent in 2000 and 4.69 percent in 2001.
The 2000 forecast is within the government's projected range of 4.4 to 5.0 percent, but lower than the last Reuters poll's 5.09 percent growth in 2000 and 5.32 percent in 2001.
Following is a table of the full results of the GDP poll. They represent the averages of the 10 forecasts from each country with the March survey results in brackets.
Govt forecast Actual
2000 2001 2000 1999 -------------------------------------------------------------- Australia* 4.0 (3.7) 3.6 (3.6) 3.75 4.4 New Zealand 4.0 (4.5) 2.9 (3.1) 3.1* 3.5 Malaysia 8.6 (7.5) 6.6 (6.2) 5.8 5.6 Singapore 8.4 (6.9) 6.7 (6.3) 7.5-8.5 5.4 Indonesia 4.0 (4.1) 4.3 (5.2) 3.0-4.0 0.23 Hong Kong 9.2 (7.5) 4.4 (4.0) 8.5 3.0 South Korea 8.5 (8.2) 6.2 (5.8) 8.9 10.7 India* 6.6 (6.6) 6.6 (6.9) 6.5 6.4 China 7.9 (7.5) 7.9 (7.7) 7.5 7.1 Sri Lanka 5.1 (4.8) 5.1 (4.8) 6.0 4.3 Taiwan 6.5 (6.6) 6.1 (6.1) 6.57 5.4 Philippines 3.7 (3.3) 3.8 (3.9) 4.0-5.0 3.2 Thailand 4.8 (5.1) 4.7 (5.3) 4.4-5.0 4.2
* fiscal 2000/01 2001/02)
June poll forecasts in brackets