Posted on: Saturday, September 15, 2001
Demand for Asia exports may slow
Bloomberg News Service
SINGAPORE The terrorist attacks in the United States will hurt demand for Asian exports, lowering economic growth in the region and delaying recovery, an economist for the Asian Development Bank said.
Asian economies, already suffering from the slump in their biggest market for electronics and other goods, will be hit harder as U.S. consumers shaken by Tuesday's attack curtail spending further, said V.N. Gnanathurai, the bank's assistant chief economist.
"It will delay recovery by a couple of quarters and also lower gross domestic product growth rates in most of these countries," Gnanathurai told Bloomberg News.
Economists said the U.S. economy may shrink in the third quarter as a result of the attacks, which destroyed the World Trade Center and damaged the Pentagon, after growing at an annual 0.2 percent in the second quarter, the slowest pace in eight years.
The Manila-based international bank will lower its growth forecasts for Asian countries outside of Japan in a report to be issued on Oct. 18.
"We will seriously consider the impact of this incident on the Asian economy and try to consider the impact of this in the next month's outlook," said Myoung-Ho Shin, vice president of the bank.
In May, the bank said average growth in the newly industrialized Asian economies Hong Kong, South Korea, Singapore and Taiwan would fall by nearly half to 4.3 percent this year from 8.4 percent last year.
Singapore is already in recession. The economy shrank at an annual pace of more than 10 percent in the first two quarters, the first contraction since 1998.
Taiwan is also headed for what's expected to be its first recession in half a century. It may slide more sharply as a result of Tuesday's terrorist attacks, economists said. The government forecasts that the economy will shrink 0.4 percent this year.
Still, the Asian Development Bank expects Asian economies to bounce back faster than those in Latin America next year as the U.S. starts to recover. The bank expects savings rates of as much as 50 percent of gross domestic product to help speed the recovery in Asia.
China and India are less dependent on exports and haven't been hit as hard. The bank in May said it expects China's growth to slow to 7.3 percent this year from 8 percent last year. Next year, growth will rise to 7.5 percent. In India, growth will speed up to 6.2 percent this year and 7 percent in 2002 from last year's 6 percent, the bank said.