U.S. soft landing to slow Asian growth in 2001: Poll
U.S. soft landing to slow Asian growth in 2001: Poll
SINGAPORE (Reuters): A recently rejuvenated Asia will see growth slacken again next year, hit by a soft landing of the United States economy, domestic political squabbles and a private sector hobbled by debt.
Economists polled by Reuters around the region were unanimous that 13 Asian economies surveyed, excluding Japan, will show slower growth next year after a robust, export-driven expansion in 2000.
The average of forecasts by leading research houses in Asia for next year were lower for most economies compared with a similar Reuters poll in September.
Economists said Asia's slower growth next year was linked to the health of the U.S. economy just as its recovery was from the debilitating financial crisis in 1997/98.
"The U.S. slowdown will affect everybody," said David Cohen, director of macro forecasting at S&P/MMS in Singapore.
Stalled reform programs in many countries, an already fragile foreign investment sentiment, a massively indebted corporate sector and unhealthy banks completed the setting for a loss in momentum, the economists said.
"Lingering worries about corporate and financial restructuring will continue to pressure consumer sentiment and investment plans going into next year," said Hwang In-sung, economist at Samsung Economic Research about South Korea. Similar sentiments were expressed about many other economies.
Growth will also be tempered by the strong showing this year. The big base created by the sharp recovery will make it difficult for the economies to surpass themselves, the economists said.
In 2000, the region rode big global demand for semiconductors, computers, software and other electronic components to rack up hefty growth figures.
In China, healthy exports, despite a slowing in the second half, government investment and emerging domestic consumption supported economic growth this year, they said.
"The picture this year has been very strong exports and sluggish consumption," HSBC chief economist George Leung said of Hong Kong.
"It'll change to one of very sluggish exports and slightly improved consumption after the U.S. cuts rates by between 25 and 50 basis points in the first quarter of next year."
Most economists raised Hong Kong's current year forecasts after the government announced better than expected real gross domestic product (GDP) growth of 10.4 percent for the third quarter -- the third consecutive quarter of double-digit growth.
Singapore's economy surprised on the upside in 2000, fueled by buoyant exports of electronics to Asia and the United States, but economists expect conditions to turn tougher in 2001.
Hong Kong's services sector would get a boost from China's entry into the World Trade Organization.
Political uncertainties in the region and a soft landing in the U.S. were downside risks for Singapore, the economists said.
China, Taiwan, South Korea, Malaysia and Thailand will also be primarily affected by the slowdown in global trade.
"Slumping stocks will slow down private consumption now and in 2001, while domestic political uncertainties would trigger caution in private investment," said First Global Investment Trust economist Lin Kuo-yang about Taiwan.
Economists said even Thailand would be less affected by a U.S. slowdown than some of its industrialized neighbors like South Korea and Malaysia whose electronic industries are vulnerable to an easing U.S. economy.
Indonesia is also dogged by the perception that it is either too unstable or too difficult to do business with as support for President Abdurrahman Wahid has waned and criticism has grown of his running of the country.