19 December 2008
Singapore: The task of grappling with economic growth is becoming a worldwide passion. There is loud note of caution sounding throughout the globe.
Economic commentators continue to speculate on the causes of the current financial gloom and how the credit crunch is going to affect us all. Throughout the world, countries are engaging in strategies to help guide their domestic economies back into the black after experiencing months of various shades of red in their books. This is what we hear about – doom, gloom, bleakness.
New Zealand is not immune from the woes currently facing the world, but it is uniquely positioned to capitalise on the regions where the economic headlines are not so dire such as South and Southeast Asia (SSEA).
While SSEA is predicted to experience its weakest growth since the 2001 downturn post the internet bubble burst, the concept of recession in this rapidly developing part of the world is quite different from that of the United States or even New Zealand which links recession with at least two quarters of negative growth.
SSEA has enjoyed an estimated 5 percent of growth during 2008. This is expected to nearly half to 3 percent during 2009 and climb back to 4 percent in 2010. Compared to the traditional strength of the North American and European markets, the East is holding its own.
However, there is still a significant reduction in growth which is a reflection of the region’s general exposure to global trade patterns and the weakening prices for commodities – a core export for many of the regions countries.
Previous crises create resilience
Singapore-based New Zealand Trade and Enterprise (NZTE) regional director Alan Koziarski says no country has been immune to the global economic crisis.
However, he says, Asia has a certain resilience. In 1997, the region went through a steep learning curve in order to recover from the Asian financial crisis that rippled out from Thailand following the collapse of the baht. Then, in 2003, parts of Asia were gripped by the SARS pandemic, which started in south China, but eventually spread to 37 countries affecting business and tourist travel for nearly a year.
Koziarski says these two massive events provided some heavy economic management experience so now the region knows how to deal with the big financial hits. In general, the SSEA financial culture is conservative and is not as highly geared as most others. This offers a degree of relative financial stability in the region that New Zealand companies can look to for markets of comparative strength.
Commentators are yet to agree on when the recession will end. Yet, Koziarski says there is still good business to be had because of the conservative economic approaches taken in Asia.
Fresh figures from the global Economist Intelligence Unit has further downgraded its economic forecasts in Asia, however, comparatively robust growth rates are likely to remain throughout the region.
Within the region, Singapore is one of the worst economic performers with a growth rate of -2.2 percent forecast for 2009, compared with New Zealand’s -0.9 percent. However, while forecasts have slipped across the board for 2009, India’s growth rate is projected to be 5.7 percent and this is after its steepest decline in export growth in 10 years.
Other positive growth rates in the region are for Cambodia (3 percent), Indonesia (2 percent), Malaysia (1.5 percent), Philippines (1.8 percent), Thailand (1.9 percent) and Vietnam (3.2 percent).
So, despite slipping growth rates, it is predicted that Asia, economically, will be the strongest region in 2009.
