chirodoc,
Good analysis IMO, however-
"The Hong Kong market is obviously breaking down. Foeign investors are doubting China's resolve to hold the HK peg at US$7.80 per US$. There is also concern that China will devalue the renminbi..."
I don't believe the situation in HK and China indicate the above to be true. I have to agree that the HK market is currently unstable and may be overpriced because of the HKMA intervention, but the economic situations don't indicate a need to devalue either currency.
Compare the projections below to those of the US, Latin & South America, and the rest of the world.
Please read the below on he Asian situation.
FWIW,
Ron
Friday September 11 1998
Mainland offers hope as Eastern Asia's GDP forecast to fall 0.7pc
REUTERS in Singapore
The combined economies of Eastern Asia are forecast to contract 0.7 per cent this year, but should return to growth with an 1.8 per cent rise in output next year, according to a poll of 140 economists.
The poll - and a weighted-average analysis of the results - showed that the region would fare much worse if not for the mainland.
Without the mainland's still-powerful growth, gross domestic product in Eastern Asia economies was forecast to drop 2.1 per cent this year and creep up just 0.5 per cent next year.
Economists offered wildly divergent forecasts for economies next year, with many warning they could not be sure of their figures and some declining to give a forecast for next year at all.
In almost all cases, the average forecasts were less optimistic than official forecasts - some drastically so.
Last year, the top economies of Eastern Asia grew 2.8 per cent from the previous full year. Smaller countries such as Vietnam and Laos were excluded.
Now only three significant economies across Eastern Asia are expected to be larger this year than last - the Chinese mainland, Taiwan and, barely, Singapore.
Only the mainland appears capable of performing the heavy lifting needed to offset the billions of dollars being carved off production in Japan, South Korea, Hong Kong and Southeast Asia.
The flanking economies of the Pacific and the Indian subcontinent are expected to keep growing this year and next, but not as quickly as they did in the mid-1990s.
The country falling the furthest is Indonesia - which, the economists estimated, had seen its economy shrink by about 15 per cent between last year and this year.
The greatest absolute loss of production by far has been in Japan, where about US$65 billion was expected to disappear from the economy this year - more than Indonesia's entire annual output.
The mainland, on the other hand, was expected to add $65 billion to its economy this year, the economists forecast.
The bottom line was that the significant Eastern Asian economies were likely to collectively lose $40 billion in GDP this year, about 0.7 per cent of their 1997 total.
The outlook for next year is particularly unclear for economies that have suffered the most from the financial and economic crisis that has swept the region since July last year.
South Korea's GDP, for example, was seen falling 6.9 per cent this year and 1.8 per cent next.
However, the forecasts for next year ranged from a 2.9 per cent rise to an alarming 12 per cent fall.
The survey listed Eastern Asia as Japan, the mainland, South Korea, Taiwan, Hong Kong, Thailand, Singapore, Malaysia, Indonesia and the Philippines.
|
