June 6, 2001
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Asian-Pacific Economies May Be Headed
For 'Fairly Hard Landing,' Report Says
Associated Press
HONG KONG -- Economies in the Asian-Pacific region are headed for a "fairly hard landing" this year, though they should rebound in 2002, economists of the Pacific Economic Cooperation Council said Wednesday.
Weaker exports to the U.S. and a resulting wave of slower economic activity throughout the region prompted the group's economists to predict growth of only 2.9% in 2001, just over half the 5.7% growth recorded in 2000.
"Excepting only the financial crisis year 1998, this would be the lowest in a decade," the report said.
Regionwide growth was expected to recover to 3.7% in 2002, it said.
In Hong Kong, the forecast for 2001 was bleaker, with real growth in gross domestic product seen at 1.1% this year, down from an initial prediction of 3.4%.
"We are lucky enough to avoid a recession this year, but things could be quite tough," said William Chow, a member of the Pacific Economic Cooperation Council's research team and visiting economics professor at the Hong Kong University of Science and Technology.
The Hong Kong government recently revised its 2001 growth target down to 3% from the originally forecast 4%. Growth slipped to 2.5% in the first quarter of this year from 6.9% in the fourth quarter of 2000.
Mr. Chow said the boost from China opening its markets to more trade and investment as it joins the World Trade Organization would be smaller than expected.
Deflation would persist, with consumer prices falling by 0.65% in 2001. Hong Kong has now experienced 30 straight months of deflation, lower prices due largely to sluggish demand.
"If people feel they are wealthier, better off, they will tend to spend more. Well, this will not happen this year," Mr. Chow said. "Consumer confidence is subdued. We see a sustained increase in bankruptcies."
Though the possibility of a protracted downturn in the U.S. economy remains an issue of intense debate, Mr. Chow forecast that Hong Kong's growth rate would recover to 3.6% in 2002, though he said unemployment would remain at a relatively high 4.6% due to pressures to increase wages.
The report cited Luo Yunyi of China's State Development and Planning Commission as saying that economic growth in China would remain robust at 7.8% in 2001, helped by strong government spending and foreign investment.
The Pacific Economic Cooperation Council, a nongovernment organization, includes government officials, scholars and business leaders from 25 countries and groups in the Asian-Pacific region. |
