Asian economies expected to grow 5.5% in 2009

By Ng Baoying, Channel NewsAsia
13 January 2009 1927 hrs

SINGAPORE: Asian economies, excluding Japan, are expected to grow a weighted 5.5 per cent this year – down from the 7 per cent growth seen in 2008.

HSBC said this slide will be led by Hong Kong, Korea, Taiwan and Singapore, while countries like China and India will be the main supports of growth.

Falling demand from most developed nations in the wake of the global downturn has hit economic growth in Asia. But observers said domestic factors are also contributing to the slowdown.

Robert Prior-Wandesforde, senior Asian economist, HSBC, said: "The other factor is domestic demand, in particular consumer spending and investment. Actually, the domestic demand in Singapore and rest of Asia slowed before exports. Over here, initially at least, it was due to the huge commodity price shock that we had a few months ago."

HSBC said it sees little upside in the near future, but it is taking comfort in the massively synchronised and powerful fiscal and monetary policies Asian economies are adopting, and also in falling commodity prices which are seeing the largest declines in 50 years.

Of all Asian countries, Singapore's open, export-dependent economy is expected to fare the worst. But it is also expected to bounce back the fastest and strongest.

"After a fall of nearly 3 per cent on average this year, I think that GDP could rise more than 5 per cent in 2010. That's the kind of recoveries Singapore often gets. Sharp downturns followed by sharp upturns," said Mr Prior-Wandesforde.

Speaking at a media conference on the bank's outlook for Asia on Tuesday, he said he expects Singapore's economy to bottom out in the first quarter, with a GDP contraction of 7 per cent on-year – the largest since the mid-1970s.

Overall, he expects Singapore to round up the year with a 2.8 per cent contraction.