Asia Pacific Economic Outlook - September 2010
The September 2010 edition of the Asia Pacific Economic Outlook gives a near-term outlook for Australia, China, India, and South Korea.
- Australia – Riding on a commodity boom and low inflation, Australia’s economy experienced a positive boost in 2010. But concerns around the steep rise in housing prices continue to worry policymakers. Prices have more than doubled since 1999 suggesting speculative activity and the possibility of a housing bubble. The central bank forecasts the economy to grow by roughly 3 percent during 2010 and 3.75 percent in 2011. Asia’s demand for raw materials and energy resources will be key to sustaining current growth rates.
- China – Chinese authorities appear to be achieving their goal of gradually slowing the economy and controlling inflation. Monetary tightening has already led to a decline in the growth of money supply and bank lending. The big news recently was an uptick in manufacturing numbers, suggesting that China’s economy is not necessarily heading for a precipitous drop. Forecast growth of roughly 8 to 10 percent in 2011 seems reasonable.
- India – Current economic conditions in India present policymakers with both opportunities and challenges. Bumper harvests from an abundant monsoon season will likely infuse the economy with liquidity. The consequent rise in domestic demand will help sustain the resurgence in manufacturing and allow the government to focus on resurrecting the financial services, insurance and real estate sectors. However, demand-side inflation is a potential thorn for policymakers. The economy is forecast to grow at over 8 percent.
- South Korea – The South Korean economy bounced back strongly from the world economic downturn, thanks in part to low interest rates, robust exports and government stimulus spending. But the country will likely experience a moderation in GDP growth during the second half of 2010 through 2011. Analogous to other nations in the region, South Korea’s economic recovery is heavily dependent on the export sector. Austerity in the EU, weak US consumption and concerns around China’s waning demand are precursors to a potential slowdown in 2011. Look for GDP growth of 4 to 4.5 percent in 2011.
