Posted on 15 Jul 2010
Asian economic growth shifts down a gear in 2011
A slowdown in the economies of China and the United States and the fallout of the euro zone debt crisis will put the brakes on growth in Asia outside Japan in the second half of 2010 and in 2011, a Reuters poll shows.
However, robust domestic demand and trade within Asia should continue to support emerging Asian economies and enable them to grow strongly for the rest of this year and next.
“Much of the recovery in Asian exports has been associated with the inventory cycle. Without a further leg up in final demand in Europe and the US, the pace of recovery in exports in Asia is likely to slow dramatically,” said Ed Teather, an economist at UBS in Singapore.
Growth in China, Asia’s second-biggest economy, will gradually slow as the government withdraws its anti-crisis stimulus, but the expansion will remain robust and inflation well under control, according to the poll.
The median forecast of 37 analysts surveyed in the past week is for gross domestic product in the world’s third-largest economy to expand 10 per cent this year, the same projection as in the previous poll published on April 14.
Government steps to slow the pace of lending, especially to the property sector and to local governments, are having an impact: the median forecast of 2011 GDP growth has edged down to 9 per cent, from 9.2 per cent in April’s poll. That would be in line with the 2009 growth rate of 9.1 percent.
India’s economy is expected to grow at a faster pace in fiscal 2010/11, supported by a double-digit rise in industrial output and robust domestic demand, the Reuters survey shows.
The survey of 21 economists showed Asia’s third-biggest economy would grow 8.4 per cent from a year earlier in the 12 months to the end of March 2011 and 8.5 per cent in 2011/12. The economy had expanded 7.4 per cent in 2009/10.
South Korea, Asia’s fourth-largest economy, is expected to grow much faster this year than predicted three months ago as demand both at home and globally is expanding more strongly, a Reuters quarterly poll showed.
South Korea’s GDP is now forecast to expand by 5.7 per cent in 2010, compared with expectations of 5 per cent growth in the prior quarterly poll in April.
Australia, whose share of exports to China rose 22 per cent in 2009 from almost zero a decade ago, is headed for a brisk economic expansion as booming export earnings, a bonanza of resource investment and fast population growth power it past most other rich nations.
Analysts forecast GDP would grow by a zippy 3.3 per cent on average this year and by 3.5 per cent in 2011, keeping alive pressure for further rises in interest rates.
That would be up from average growth of 1.3 per cent in 2009, when Australia’s A$1.2 trillion (RM3.38 trillion) economy was one of the few in the developed world to dodge recession, thanks to strong demand for its natural resources from China and India.
In Southeast Asia, Singapore led a strong recovery in the first half of 2010, thanks to a base effect and healthy demand from China and other Asian peers.
Singapore’s government said on Wednesday its economy would grow a stunning 13-15 per cent in 2010 after reporting a record 19.3 per cent year-on-year surge in second quarter output, but analysts said there was little immediate risk of overheating.
A median of the Reuters poll, done before Wednesday’s data, showed revisions of growth forecast to 10 per cent for 2010 and 5 per cent for 2011 from 6.8 per cent and 5.5 per cent respectively in the April poll.
Indonesia’s growth forecast was revised to 5.9 per cent in 2010 and 6.2 per cent in 2011 from 5.8 per cent and 6.1 per cent three months ago, the median of the Reuters poll showed.
Thailand looked to have emerged relatively unscathed from the two-month political violence with an upward revision of growth in 2010 to 5.7 per cent from 4.3 per cent and downward revision to 4.2 per cent in 2011 from 4.5 per cent earlier.
The Philippine’s are expected to grow 5.7 per cent in 2010 and 4.6 per cent in 2011, up from the previous forecast of 4.2 per cent and 4.4 per cent respectively. Malaysia economy is forecast to grow 7 per cent in 2010 and 5.4 per cent in 2011 versus 5.3 per cent and 5.1 per cent previously.
