News Release:20040113

Asian Economic Outlook 2004
1st Quarter Report

January 13, 2004
Nomura Research Institute, Ltd.
Asian Economies Research Unit

Regional Overview

The Asian economies continue to stand on firmer ground. External demand is recovering on the robust economies of the developed countries. Domestic demand of China and the ASEAN continue to be strong and even the Asian NIEs are retrieving their recovery paths. As various elections are scheduled in some countries in the coming year, we should consider the impact of the elections on the financial market and the economy.

South Korea

Though private consumption and capex remain sluggish, external demand is expanding favourably. While political confusion lingers, it seems to be peaking and we believe bad news will soon be exhausted. We downgrade the growth rate forecast, but we still stick to our recovery scenario for 2004.

Taiwan

Exports continue to be strong and it looks feasible to achieve near 5% y-y growth in Q4 alone, depending on the growth in private consumption. We raise our growth forecasts for 2003 and 2004 to 3.1% and 4.0%, respectively, considering factors such as the steady expansion in exports, the recovery in consumer confidence and the speeding-up of public investments including infrastructure projects.

Hong Kong

We revise up our real GDP growth forecasts for 2003 and 2004. The current economic recovery is stronger-than-expected and there are signs that the recovery in domestic demand may further accelerate in 2004. External demand may also continue to be robust. Though deflation continues throughout 2003, we believe prices will rise in 2004.

China

We raise real GDP growth forecast for 2003 and 2004. In 2004, the Chinese economy should see a healthier growth pattern - exports and investment may slow and the overheating in some sectors may subside, while private consumption accelerates. Deflation should come to an end in 2003. The trade surplus may shrink due to strong imports arising from robust domestic demand.

ASEAN

Singapore:	The economy is on the recovery track. As for the outlook, we believe exports, mainly those of electronics products, will strengthen, while private consumption still struggles to recover on a tough employment situation. We expect growth rates for 2003 and 2004 to be 0.9% and 5.0%, respectively.

Malaysia:	Domestic demand continues to be robust and we expect exports to recover in 2004. As for politics, the focus of attention is on the implementation of the general election amid a smooth establishment of the PM Abdullah regime.

Thailand:	Domestic demand in urban and rural areas increases favourably, and external demand is showing signs of recovery. Despite some criticisms over the increased deaths caused in the fight against drug taking, the so-called CEO-type political operation of PM Thaksin is affecting both internal and external affairs of the government, as supported by the robust economy.

Indonesia:	We expect GDP will grow by 3.8% in 2003 and 4.3% in 2004. The exchange rate of the Rupiah has been maintained at around R8,500/US$ since September, in line with our forecast, but we foresee it softening in 1H04. The Megawati-led PDI Perjuangnan may face difficulty in the next general election in April.

The Philippines:	The economy grew by 4.4% in Q3, up from 4.0% in Q2. We expect private consumption will continue to expand. We revise up our economic growth forecasts for 2003 and 2004 to 3.9% and 4.2%, respectively. We foresee the exchange rate of the peso at around P55.0/US$ for the moment.

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Inquires to: Economic Research Department, Nomura Research Institute
Telephone. 81-3-5255-1800

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