Asian Economic Outlook 2003-2004
4th Quarter Report
October 15, 2003
Nomura Research Institute, Ltd.
We believe momentum is gathering for a recovery in the Asian economy, owing to an improving external environment, expressed as: (1) upside in Asian stock markets, as supported by the rise in global stock prices; (2) an increase in exports; and (3) an early restoration of cross-border visitor numbers. Meanwhile, in preparation for the US presidential election in November 2004, the US government is exerting greater pressure on China and other parts of Asia which possess a substantial trade surplus with the US, against the backdrop of a slow recovery in employment in the US.
Although the economy seems to have hit the bottom, the recovery still appears slow, owing to factors such as labour disputes, political disruption and the impact of the recent typhoon. We believe the government¡s countermeasures are insufficient, and cut our economic forecast.
Since the start of 2H03, the economic recovery has been accelerating, as illustrated by export and production statistics. Meanwhile, consumer confidence and stock prices have improved substan- tially, and the number of visitors from Asia is at about 90% of the pre-SARS level. Considering the upturn in the global economic environment, we raise our real GDP growth forecasts to 2.9% for 2003 and 3.7% for 2004.
We raise our real GDP growth rates for 2003 and 2004. The 0.5pp drop in 2Q real GDP growth was smaller than we anticipated, on better-than-expected export performance, owing to expectations for a strong increase in the number of mainland tourists. The pace of recovery in private consumption is faster than we previously forecast.
We raise our estimate for real GDP growth in 2003 and 2004, owing to stronger-than-expected exports and investment. However, we expect the economy to decelerate in 4Q, since the government appears to be trying to tighten its monetary and real estate investment policies.
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