Source: www.asiaecon.org |
ASIA'S ECONOMIC OUTLOOK DETERIORATES
A recent poll conducted by Reuters shows a sharp deterioration of Asia's economic outlook for the year.
A recent poll conducted by Reuters shows a sharp deterioration of Asia’s economic outlook for the year.
According to the poll, China, India, the Philippines and Indonesia will be the only economies in Asia to record growth this year. However, their growth will be significantly lower than in previous years. The poll also shows that Singapore and Taiwan will be Asia’s most battered economies this year
China is expected to have a 7.8 percent growth rate this year, below its target of 8 percent, which is largely considered to be the minimum required growth rate to create enough jobs to avoid social tensions. This would be the slowest growth of the Chinese economy in 10 years. China is expected to see a modest recovery in 2010 when trade flows stabilize.
India’s economic growth is forecast to slip to 5.7 percent for its financial year ending March 2010. This is a significantly lower growth rate compared to its average of 8.8 percent annually over the past five years. The Indian economy is expected to recover to 7.1 percent in the 2010-2011 fiscal year as increased government spending and duty cuts help stimulate economic activity.
The poll forecast the Philippine economy to expand by just 2.3 percent this year, lower than a 3.3 percent growth estimate in a similar poll in December and below government expectations for at least a 3.7 percent growth. The decline in the forecast of the country’s economic growth is attributed to plunging exports and a slow down in remittance inflows.
Indonesia is poised to expand by 4 percent this year and 5.1 percent in 2010. Their higher projected growth rate is due to the fact that exports contribute only about one third of the country’s gross domestic product, making it much less dependent on trade than its neighbors. These forecasts, however, are still significantly lower than the 4.8 percent estimate in a similar poll three months ago, mainly because of weak exports and falling commodities prices.
Singapore’s economy is expected to contract by 4.9 percent this year, its worst performance ever. The export-oriented economy used to have an average of 6.4 percent annual growth over the past five years, but collapsing exports and plunging global demand for the country’s goods have forced its economy to turn for the worse.
Similarly, Taiwan, another export-oriented economy, is set to shrink by 4.9 percent this year due to declining exports, particularly for electronic goods and decreasing local consumer confidence. This would be Taiwan’s weakest performance since data was first published in the 1950’s.
Thailand’s economy is expected to shrink by 1.5 percent this year while Malaysia will see a 1.2 percent contraction, due to plunging exports and local demand. The South Korean economy is forecast to fall by 2.5 percent this year because of declining exports and worries that it holds too much foreign debt.
The poll reports a dismal year for Asian economies. However, it also shows a few bright spots. One is that inflation is seen to be receding across Asia, giving the region’s central banks more room to cut rates to stimulate economic activity. The poll also expects Asia’s economies to show signs of recovery in 2010, as demand from its main markets in Europe and the U.S. slowly improves and fiscal stimulus packages take effect. A regional recovery in 2010 assumes that the U.S. economy will pull out of recession late this year.
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Source: www.asiaecon.org |