ASIAN ECONOMIES ASSEMBLING ON FIRMER GROUND
Summary
Regional Overview
The Asian economies continue to stand on firmer ground. External demand
is recovering on the robust economies of the developed countries. Domestic
demand of China and the ASEAN continue to be strong and even the Asian
NIEs are retrieving their recovery paths. As various elections are scheduled
in some countries in the coming year, we should consider the impact
of the elections on the financial market and the economy.
South Korea
Though private consumption and capex remain sluggish, external demand
is expanding favorably. While political confusion lingers, it seems
to be peaking and we believe bad news will soon be exhausted. We downgrade
the growth rate forecast, but we still stick to our recovery scenario
for 2004.
Taiwan
Exports continue to be strong and it looks feasible to achieve near
5% y-y growth in Q4 alone, depending on the growth in private consumption.
We raise our growth forecasts for 2003 and 2004 to 3.1% and 4.0%, respectively,
considering factors such as the steady expansion in exports, the recovery
in consumer confidence and the speeding-up of public investments including
infrastructure projects.
Hong Kong
We revise up our real GDP growth forecasts for 2003 and 2004. The current
economic recovery is stronger-than-expected and there are signs that
the recovery in domestic demand may further accelerate in 2004. External
demand may also continue to be robust. Though deflation continues throughout
2003, we believe prices will rise in 2004.
China
We raise real GDP growth forecast for 2003 and 2004. In 2004, the Chinese
economy should see a healthier growth pattern – exports and investment
may slow and the overheating in some sectors may subside, while private
consumption accelerates. Deflation should come to an end in 2003. The
trade surplus may shrink due to strong imports arising from robust domestic
demand.
ASEAN
Singapore: The economy is on the recovery track. As
for the outlook, we believe exports, mainly those of electronics products,
will strengthen, while private consumption still struggles to recover
on a tough employment situation. We expect growth rates for 2003 and
2004 to be 0.9% and 5.0%, respectively.
Malaysia: Domestic demand continues to be robust and
we expect exports to recover in 2004. As for politics, the focus of
attention is on the implementation of the general election amid a smooth
establishment of the PM Abdullah regime.
Thailand: Domestic demand in urban and rural areas
increases favorably, and external demand is showing signs of recovery.
Despite some criticisms over the increased deaths caused in the fight
against drug taking, the so-called CEO-type political operation of PM
Thaksin is affecting both internal and external affairs of the government,
as supported by the robust economy.
Indonesia: We expect GDP will grow by 3.8% in 2003
and 4.3% in 2004. The exchange rate of the Rupiah has been maintained
at around R8,500/US$ since September, in line with our forcast, but
we foresee it softening in 1H04. The Megawati-led PDI Perjuangnan may
face difficulty in the next general election in April.
The Philippines: The economy grew by 4.4% in Q3, up
from 4.0% in Q2. We expect private consumption will continue to expand.
We revise up our economic growth forecasts for 2003 and 2004 to 3.9%
and 4.2% respectively. We foresee the exchange rate of the peso at around
P55.0/US$ for the moment.
January 2004
Nomura Research Institute, Ltd.
Asian Economies Research Unit
