Asia near­ing end of slow­down as China re­cov­ers

The Pak Banker - - Front Page -

SIN­GA­PORE

East Asian coun­tries are poised to re­port gross do­mes­tic prod­uct data that may mark the bot­tom of the re­gion's slow­down, as signs of a re­cov­ery in China and the U.S. her­ald a re­vival in de­mand for ex­ports.

In Thai­land Gross do­mes­tic prod­uct prob­a­bly rose 3 per­cent last quar­ter from a year ear­lier, slow­ing from a 4.2 per­cent gain in the pre­vi­ous three months.

Hong Kong's GDP prob­a­bly rose last quar­ter af­ter de­clin­ing the pre­vi­ous three months, ac­cord­ing to a Bloomberg sur­vey be­fore a re­port to­mor­row. Ex­pan­sion in Malaysia and Thai­land may have eased while Sin­ga­pore's con­trac­tion was prob­a­bly worse than ini­tially es­ti­mated, sep­a­rate sur­veys showed. Re­gional growth will prob­a­bly re­cover this quar­ter, Moody's An­a­lyt­ics, Cit­i­group Inc., and Aus­tralia & New Zealand Bank­ing Group pre­dict.

"Across Asia, the busi­ness cy­cle likely reached its trough, with many economies re­port­ing the worst growth in the third quar­ter," said Glenn Levine, an econ­o­mist at Moody's An­a­lyt­ics in Sydney. "Stim­u­lus mea­sures are start­ing to boost Chi­nese de­mand and the re­cov­ery slowly com­ing into fruition in the US means 2013 will be a bet­ter year for most of the re­gion."

Most Asian cur­ren­cies, led by the South Korean won and Tai­wanese dol­lar, have risen in the past three months as stronger hous­ing de­mand in the U.S. and ac­cel­er­at­ing fac­tory out­put in China sig­nal the two largest economies may lift the world from its mid-year slow­down. While in­ter­est-rate cuts in Thai­land and the Philippines in Oc­to­ber un­der­scored the im­me­di­ate risks to growth, pres­sure to loosen mone­tary pol­icy fur­ther has abated else­where, with Sin­ga­pore and In­done­sia re­frain­ing from stim­u­lus in their most re­cent de­ci­sions.

"The re­gion is un­likely to go for fur­ther eas­ing at this point in time," said Aninda Mi­tra, a Sin­ga­pore-based econ­o­mist at ANZ. "Coun­tries are start­ing to face as­set price and in­fla­tion pres­sures and they'll have to be care­ful about that."

China's fac­tory out­put and re­tail sales ex­ceeded fore­casts in Oc­to­ber and ex­ports climbed the most since May. U.S. con­sumer spend­ing, the big­gest part of the econ­omy, and an im­prov­ing hous­ing mar­ket are lead­ing the ex­pan­sion amid ris­ing con­fi­dence, bet­ter em­ploy­ment prospects and health­ier house­hold fi­nances.

Hong Kong's gross do­mes­tic prod­uct prob­a­bly ex­panded 0.5 per­cent in the three months through Septem­ber from the pre­vi­ous quar­ter, ac­cord­ing to the me­dian of 11 economists in a sur­vey. Malaysia's year-onyear eco­nomic growth eased to 4.8 per­cent in the third quar­ter from 5.4 per­cent, ac­cord­ing to sur­vey be­fore a re­port due to­mor­row.

Malaysian Prime Min­is­ter Na­jib Razak is in­creas­ing spend­ing ahead of a gen­eral elec­tion that must be held by early 2013. Na­jib an­nounced lower in­come taxes and more hand­outs for the poor in his 2013 bud­get un­veiled in Septem­ber, as the gov­ern­ment pro­jected South­east Asia's third-largest econ­omy will ex­pand as much as 5 per­cent in 2012.

In Thai­land, Prime Min­is­ter Yingluck Shi­nawa­tra has also boosted spend­ing and raised salaries as the na­tion re­cov­ers from the worst floods in al­most 70 years. Gross do­mes­tic prod­uct prob­a­bly rose 3 per­cent last quar­ter from a year ear­lier, slow­ing from a 4.2 per­cent gain in the pre­vi­ous three months, ac­cord­ing to a Bloomberg sur­vey be­fore a re­port due Nov 19.

Mean­while, Sin­ga­pore's econ­omy prob­a­bly shrank 2.9 per­cent in the third quar­ter from the pre­vi­ous three months, com­pared with a pre­lim­i­nary es­ti­mate of a 1.5 per­cent con­trac­tion, an­other sur­vey showed.

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