Saturday, October 14, 2006
[RealEdge] BT : US slowdown may hit Asian economies
| Published October 14, 2006  | |||
| US slowdown may hit Asian economies But it won't affect regional giants and Vietnam: analyst
By ANNA TEO
ECONOMIES which depend on exports to the United States - Taiwan, Singapore, Hong Kong, South Korea, Malaysia - will be hit by the expected US deceleration, says Deutsche Bank chief economist Norbert Walter.
The German bank's forecasts for Singapore see its economic growth slowing from about 7.5 per cent this year to just over 4 per cent in 2007. Mr Walter says that, meanwhile, the Asian giants of Japan, Australia, China and India, and up-and-coming countries such as Vietnam are expected to escape the global downturn almost completely - at least for now. 'Europe or Japan will not substitute as locomotives for the world economy, nor will a dramatic decline of commodity prices come to the relief of the countries dependent on foreign energy and other commodities, One indicator, he points out, is non-Japan Asia's excellent export performance: exports from the region have more than doubled since the 1997 financial crisis. But awareness of demographic problems and opportunities is very unevenly developed across the continent. While countries such as Japan and Korea have to grapple with ageing and shrinking populations and workforces, others - in South Asia and South-east Asia - have young and growing populations. So Asia offers complementary demographic developments - 'a boon for open-minded countries and for multinational companies with locational flexibility' Overall, Asia's economic growth will remain robust in 2007, with cyclical performance 'almost as good as in 2006'. Regionwide, the outlook is benign through 2007, but 'the day of reckoning will come', Mr Walter says. Apart from global imbalances, various structural and systemic issues such as still-high non-performing loan ratios in a number of Asian countries, the 'burdensome government debt' in Japan and unfunded old-age provision systems may all come to a head before too long. According to Mr Walter, the day of reckoning will come after the next US presidential election and the 2008 Beijing Olympic Games. 'Bubbles will burst and foreign exchange rates will be in for dramatic adjustments, then recession may be unavoidable, | |||
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