Global slowdown to dent Asia growth in 2011

Thursday, 14 October 2010 22:48 - - {{hitsCtrl.values.hits}}

Asia will end 2010 with strong growth but a faltering recovery in the United States and Europe will hurt export-oriented Asian economies more than domestically focused ones in 2011, a Reuters quarterly poll shows.

Economists revised up forecasts for 2010 growth for most economies in a poll of 13 countries, excluding Japan.

They revised down their 2011 forecasts compared with the last quarterly poll in July, citing reduced government stimulus and a slow recovery in the United States and Europe.

“The slowdown has clearly begun in terms of the industrial cycle and that will continue,” said economist Robert Prior-Wandesforde of Credit Suisse, pointing to leading indicators that suggest non-Japan Asia’s industrial growth will ease over the next six months.

“The slowdown could be abrupt and surprise many by the extent of the weakness,” he said.

A struggling recovery in the United States, the impact on Europe of fiscal tightening and China’s bid to control growth could all undermine demand for Asian exports.

The poll showed that China’s economy is expected to grow 10 percent in 2010, unchanged from the previous poll published on July 14.

Growth will then ease to 8.9 percent in 2011, a modest cut from a forecast of 9.0 percent in July.

For Asia’s third-biggest economy, India is expected to grow 8.4 percent in the year to March 2011, unchanged from the July poll, and 8.3 percent in 2011/12, down from 8.5 percent in the previous poll. GDP rose 7.4 percent in 2009/10.

Benefitting from strong demand for resources from China and India, Australia is expected to grow 3.4 percent in 2010 and 3.5 percent in 2011 as booming export earnings fuel a record rise in mining investment and broad-based gains in jobs and incomes.

Asian demand has already driven massive price increases for coal and iron ore, Australia’s two biggest exports, and turned the country’s perennial trade deficit into a surplus, setting it far apart from most other rich nations.

Asia’s Tech heavyweights South Korea and Taiwan should also brace for slower growth in 2011.

South Korea is now forecast to expand by 6.1 percent in 2010, up from 5.7 percent in the July poll.

But Asia’s fourth-largest economy is seen growing by 4.3 percent next year, slightly lower than a forecast of 4.5 percent in the prior poll.

Taiwan’s 2010 growth forecast was revised up to 8.5 percent from the previous poll’s 7.5 percent, thanks to stronger than expected export growth and investment in the first half of the year. The 2011 forecast was unchanged at 4.3 percent.

In Southeast Asia, Singapore is expected to lead growth among its peers in 2010, thanks to strong global demand for electronics and drugs and a surge of tourists to its two new casino resorts.