With the end of SARS, the Asian economies
began to strengthen in the third quarter of 2003, as tourist
arrivals picked up and consumption returned to more normal levels.
Barring any unforeseen circumstances, Asia’s growth, initially
driven by exports, is likely to become more broad-based as income
and employment growth pick up over time.
After being dormant for so long, the Japanese economy surprised
with impressive annual growth of over 6% in the final quarter
of last year and first quarter of this year. Growth was primarily
driven by non-residential fixed investment spending on a rise
in corporate profits. Exports also rose sharply despite the
Yen’s strength, with China becoming an increasingly important
catalyst.
China continued to spring ahead with GDP growth last year at
9.1%. Indeed, there are growing fears of overheating, driven
in part by strong investment spending and credit demand. While
significant, these pressures have been capped by timely measures
to moderate demand growth.
For South-east Asia, the growth momentum will continue to be
propelled by strong external demand and rising consumption.
Although private investments are starting to pick up, the recovery
is expected to be gradual due in part to lingering political
and security concerns. All in, conditions have generally become
more favourable for a period of sustained growth in the region.
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