Roubini, aka Dr Doom, seems getting more optimistic too.. this is his comment
today about Asia:
OUTLOOK & ECONOMICS
Nouriel Roubini raises growth forecasts for AsiaBy Sameera Anand | 29 July
2009
Read this article online at:
http://www.financeasia.com/article.aspx?CIID=151394
China and India will lead growth in Asia, but the recovery in the region will
be U-shaped, says Roubini's RGE Monitor.
RGE Monitor, the firm founded by economist Nouriel Roubini, yesterday raised
its growth forecasts for Asia, including China and India. The change is based
on an improvement in global conditions in the second quarter of 2009,
aggressive policy responses by governments and the fact that manufacturing
activity in several countries has bottomed out. Inventory re-stocking, stimulus
measures and global risk appetite will also temporarily boost Asia's growth,
RGE said.
However, RGE continues to believe global growth will contract until late 2009
or early 2010. Its forecast is that global growth will contract by 1.9% in 2009
and that economic growth in the United States, the European Union and Japan
(the G-3) will be sluggish. RGE believes a complete recovery in Asia is
dependent on the timing and pace of the G-3 recovery, hence Asia's growth will
remain under pressure for the rest of this year.
"Deleveraging in the US and [the] EU and a slow revival of the global
electronics cycle will lead to a U-shaped recovery in Asia," said RGE. The New
York-based economic news and analysis firm added that structural reforms to
boost domestic demand in Asia will need several years to take effect so a
sustained recovery in Asia in the short term is dependent on the US recovery.
"However, better macro and financial fundamentals relative to other emerging
markets will be a plus for Asian economies and asset markets during the
recovery," added RGE.
Asia ex-Japan will grow by 4.3% in 2009, led by China and India, and will
revive further and grow by 6.2% in 2010, the firm said.
RGE expects China to grow around 7.5% in 2009 with the fiscal stimulus being a
key driver. However, RGE does not expect China's infrastructure spending to
boost manufacturing in the rest of Asia. It cautioned that "China will need to
start tightening carefully in 2009 given overheating in equity and property
markets" and added that China also has limited ability to diversify from US
assets.
In India, domestic consumption will ensure growth of around 5.7%. But RGE
highlighted that Indian companies will have difficulty accessing external
capital which has been the main driver of investment in recent years and also
suggested that investors into India are overly optimistic about government
reforms.
Further, slower exports and the dependence of both China and India on foreign
capital will keep growth in these two economies below full potential, even in
2010.
RGE predicted the four "Asian Tigers" namely Hong Kong, Singapore, South Korea
and Taiwan, as well as Malaysia and Thailand, will contract in 2009 with a
sluggish recovery in 2010, on account of pressure on exports, and reduced
domestic demand. Growth in the Philippines, Indonesia and Vietnam will also
slow due to export contraction and commodity correction.
Roubini is a professor at New York University's Stern Business School and a
former adviser to the US Treasury and the International Monetary Fund. He was
one of the few economists to correctly predict the scale of the recent
financial crisis.
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