Global slowdown expected to dent Asia growth in 2011

SINGAPORE — Asia will end this year 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.

For the Philippines, for instance, the poll raised gross domestic product (GDP) growth projection to 6.8% from the 5.7% pegged in July, but kept the 4.6% forecast for next year.

“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% in 2010, unchanged from the previous poll published on July 14.

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

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

In Southeast Asia, Singapore is now expected to grow 14.5% next year from the 10% seen in July. Growth next year, however, is projected to ease to 4.8% from the 5% seen in July. Thailand will grow 7.4% this year (from 5.7% in July) and 4% in 2011 (from 4.2%); Malaysia, 7.1% (from 7%) and 5.1% (from 5.4%); Vietnam, 6.6% this year and 7% next year (no July projection); and Indonesia, 6% (from 5.9%) and 6.1% (from 6.2%).

Benefitting from strong demand for resources from China and India, Australia is expected to grow 3.4% in 2010 and 3.5% 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% in 2010, up from 5.7% in the July poll.

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

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