Hong Kong:China is on track to reach its 8% growth target this year, while Asia’s worst-hit economies Singapore and Taiwan will see a sharp turnaround next year as the continent rebounds, a Reuters poll shows.
The poll covered growth estimates from at least 100 analysts in 12 economies in Asia, including Australia and New Zealand, but excluding Japan.
It shows gross domestic product (GDP)—the value of all goods and services produced—in Singapore and Taiwan will shrink by just over 5% this year, deteriorating from a previous poll in March, which forecast they would both contract 4.9%.
While this year will be Singapore’s worst ever and Taiwan’s weakest performance since records began in the 1950s, the worst does appear to be over for the export-reliant economies. Both will see the sharpest turnaround in Asia from recession to growth next year, the poll shows.
Singapore already leapt out of recession in the second quarter and the poll forecasts the island economy will rebound 4.45% next year, while Taiwan’s GDP will increase 4%.
Signs that China’s economy is picking up after a sharp slowdown is boosting trade, while fiscal stimulus across the continent is helping stem the downturn. But while economists foresee a rebound in Asia next year, that assumes an upswing in the US.
“Recent data from China has indicated that their economy is building momentum, supported by their fiscal stimulus, and data from Korea and Taiwan show exports appear to have bottomed out,” said David Cohen at Action Economics. “There are still clouds over how much of this can be sustained: a lot will depend on global export demand and that will largely hinge on how much the US and European economies can turn around.”
China will continue to see the fastest growth in Asia, expanding by 8.8% in 2010 after an estimated 8% expansion this year.
India is set to grow 7.25% during its fiscal year to March 2011, up from an estimated 6.35% expansion in the year ending March 2010.
The forecasts for next year are slightly better than in the March poll, amid signs that exports are declining less sharply than early in the year and consumption in the US and Europe may be stabilizing.
Inflation is benign for most of Asia, and consumer prices are declining in Thailand and a few other economies. However, the poll shows prices are likely to pick up next year as the economic climate improves, notably in India where inflation is forecast to average 5.5% in 2010.
Indonesia will be South-East Asia’s best performer, growing 5% this year and 5.9% in 2010, as its more domestically driven economy insulates it from the export downturn. Malaysia and Thailand should enjoy a modest rebound next year, of 4% and 3%, respectively, after struggling with weak exports this year.
Australia is the only one of the 12 Asia-Pacific countries where growth will slow next year, to 0.5% for the year ending June 2010, from an estimated 0.8% for the year through June.
Vithoon Amorn in Bangkok, Gyles Beckford in Wellington, Sonya Angraini and Dicky Kristanto in Jakarta, Lee Chyen Yee in Taipei, Karen Lema in Manila, Nopporn Wong-Anan in Singapore and David Chance in Kuala Lumpur contributed to this story.