q1 data point to slower 2009 growth across asia

q1 data point to slower 2009 growth across asia
By The Nation
Asia News Network
Published on May 13, 2009

The economic report

The economic report for Asia's first quarter has signalled an average decline in growth for the whole year, due mainly to spillover from the US financial crisis and the threat of the recent H1N1 flu outbreak.


The International Monetary Fund expects Asia to grow 1.3 per cent this year, a stark slowdown from last year's 5.1 per cent.


The Asian Development Bank likewise takes a conservative outlook, with Asia expanding 3.4 per cent versus last year's 6.3 per cent, including the Pacific region.


The IMF says the US and other advanced economies may not immediately respond to pump-priming initiatives, thus the need for Asian governments to boost domestic demand.


Asian countries must rely more heavily on domestic consumption to keep their economies afloat.


Sales by manufacturing and export sectors in Asia would be adversely affected, so it would do harm for Asian economies to keep their level of reliance on exports for purposes of boosting their economies.


Governments in the region should use both fiscal and monetary measures to beef up domestic demand. National governments must sustain stimulus programmes started this year through 2010, it said.

THAILAND: The economy will possibly contract 5 per cent in the first quarter, the lowest pace in this round of economic downturn.


Government spending and net exports - despite the sharply contraction in exports - are key engines to help keep the economy from plunging further. The government's economic stimulus package, both populist policy and infrastructure investment, has yet to bear results.


The economy could back-pedal about 3 per cent for the whole year, without additional economic and political risk factors eroding domestic demand and exports.


Retail trade-related sectors have been less hurt by the economic slowdown than other sectors. Consumers continue to need non-durable goods for living while postponing durable goods, luxury products and unnecessary expenses for awhile.

BANGLADESH: The economy remains surprisingly resilient with the government projecting growth at 5.88 per cent, slightly down from last year's 6.1 per cent.


Strong agriculture output and matching industrial performance helped the buoyant outlook. Although exports and remittance inflow continue to be strong, there are signs that the recession has started biting.


Overall export growth has slowed considerably to a monthly decline of 3 per cent by February. Exports of ready-made garments have fallen sharply from 59 per cent at the beginning of this year to 19 per cent in February.

CAMBODIA: The economy has been hit badly, ending years of economic growth that used to run at two digits before dropping to 6.8 per cent last year.


The World Bank predicts that the economy will contract 1 per cent this year, although the government sees growth of up to 2 per cent.


The global crisis has had a serious impact on the garment, construction and tourism sectors, which, along with agriculture, are the economy's main growth factors.

CHINA: The slowest quarterly growth in 10 years looks much like a dark cloud that features a silver lining.


The economy expanded by 6.1 per cent year-on-year in the first quarter, 4.5 percentage points lower than the first quarter of last year and down 0.7 percentage points from the previous quarter.


Unsurprisingly, growth in industrial production and investment has accelerated considerably to help stabilise the economy. This lends more evidence that the 4 trillion yuan (Bt20.4 trillion) stimulus plan is working as expected.


More encouragingly, retail sales grew 15 per cent to 2.94 trillion yuan in the first quarter, laying a solid foundation for the country to wean itself from excessive dependence on investment or exports for growth.

INDIA: The meltdown effect is certain to be seen in merchandise exports as industry is expected to turn in one of its weakest earnings for the first quarter.


With three stimulus packages failing to spur industrial production, the government has said the fiscal measures will start having an impact on industry from April-May.


The government has lowered its growth projection to 6.5-6.7 per cent in 2008-09 from an ambitious 8-9 per cent.


The economy is likely to remain relatively weak this quarter and slowly pick up thereafter. It is expected to show a fairly strong recovery in growth in the fiscal year's second half, starting in October, to 7-7.5 per cent.

This is part one of a two-part series.