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To: ms.smartest.person who wrote (1927)	9/18/2001 3:50:00 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 2248

Economy: Analysts Say Economic Forecasts Are Obsolete, Need to Be Revised September 18, 2001 By JASON BOOTH Staff Reporter of THE WALL STREET JOURNAL HONG KONG -- The terrorist attack on the U.S. not only destroyed the World Trade Center, it effectively destroyed the forecasts of analysts and economists throughout Asia. To many observers, the world changed on Sept. 11. As a result, much of the economic research that came before that date is of little real use. "It's back to the drawing board. We're reviewing everything in light of this," said Hunsoo Kim, head of Asian research for Merrill Lynch. 1See full coverage of the attack. Easier said than done. The problem for anyone planning investment or business strategy in Asia is that the business of making economic forecasts has pretty much ground to a halt following the attack. Unlike previous events, such as earthquakes or changes in political leadership, there has been no flurry of economic and earnings revisions. And, there isn't likely to be for weeks: Asia will be flying blind. For economists, the big problem is that the economic figures currently available from the U.S. are largely obsolete. "The feeling is that after Tuesday's incident these numbers become somewhat irrelevant," said Yiping Huang, regional economist at Salomon Smith Barney in Hong Kong. Friday saw the U.S. release of a slew of figures, including consumer confidence and spending figures and industrial production. But in each case, the statistics were gathered prior to the terrorist attacks. The first meaningful indicators of the post-attack U.S. economy will come Thursday when weekly unemployment claim figures are released. Yet employment is a lagging indicator, meaning that any job losses resulting from the disaster won't show up for weeks or months. The numbers that economists and businesses are most eager to see are consumer confidence and spending. The U.S. consumer market is valued at around US$7 trillion a year, or 17% of total world economic output. Should consumer spending falter in the wake of the disaster, Asia's economies will falter as well. Yet those numbers won't be out until the end of this month. Another problem for some brokerage firms is that their home offices, some of which were in or near the World Trade Center, have been disrupted by the disaster and are now having difficulty generating numbers. "I'm putting pressure on our New York office to provide some kind of economic forecasts," said one Asian economist at a major U.S. bank. "But they say they are still traumatized. There is still a level of panic there." In order to come up with rough figures, economists are looking back in history for parallels. Some compare current events with the Gulf War. Others look to the Kennedy assassination in 1963. Yet, none quite fit. The Gulf War, for one, was a standard ground war half a world away from suburban America, whose pocketbooks are the key to the world economy. Kennedy's death occurred amid an economic upturn. "You can look to past events, but to draw investment conclusions from that would be a mistake," said Dio Wong, regional equity strategist at Merrill Lynch in Hong Kong. Where there is agreement is that when figures do start to emerge, they will likely look bad for Asia. The region is vulnerable from many sides. The attack itself led to a slowdown in business activity of all kinds, including the business the U.S. does with Asia. Then there is the likelihood of U.S. military retaliation, which again will bring business activity to a halt, and possibly disrupt shipping through the Suez Canal and Persian Gulf. Meanwhile, the attack and its aftermath are likely to damp U.S. consumer confidence, reducing demand for Asian exports ranging from computers to tennis shoes. Hong Kong General Chamber of Commerce chief economist Ian Perkin says he's not ready to come up with any definite growth figures yet, though he does predict that Hong Kong will see negative growth in the third and fourth quarters. Prior to the attack the chamber was looking at one quarter of contraction. The other point of agreement is that any hope of an export recovery will be delayed. Nomura International (Hong Kong) Ltd. had been looking for exports to start turning around in November or December. Yet following the attack, combined with the fact that U.S. consumer confidence was already looking fragile, the export rebound will likely be delayed until the third quarter of next year. "If you wanted to wage economic warfare you couldn't have picked a better time," said regional economist Paul Alapat. Write to Jason Booth at jason.booth@awsj.com2. -------------------------------------------------------------------------------- URL for this Article: interactive.wsj.com Hyperlinks in this Article: (1) interactive.wsj.com (2) mailto:jason.booth@awsj.com -------------------------------------------------------------------------------- Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved. Printing, distribution, and use of this material is governed by your Subscription Agreement and copyright laws. For information about subscribing, go to wsj.com Used with permissin of wsj.com