IMF
cut 2013 global economic outlook
The
International Monetary Fund (IMF) revised down the world growth forecast of
this year 0.2% from 3.5% to 3.3% while remained the 2014 forecast at 4%. This
information is also supported by the recent the Organization for Economic
Cooperation and Development (OECD)’s global economic forecast that OECD cut this
year forecast from 3.4% to 3.1% and the next year forecast from 4.2% to 4%. The
initial forecast of OECD was constructed in November last year. The recent
adjustment of the forecasts from IMF and OECD show the negative sign of global
economy. Furthermore, the major concerns are eurozone’s ability to get through
its crisis and the ability of the US and Japan to cut public sector deficits
and debt.
US
economy is still not good
Euro zone is facing recession
The
IMF forecasts the economy of France, Spain, Italy, Portugal, Greece,
Netherlands, Cyprus, and Slovenia to be contracted in this year thanks to the
tight lending conditions for companies and households, job cuts and frozen
investment. This is the result of sovereign debt crisis and banking troubles. The
financial crisis has left 19.2 million workers with no job and is required a
trillions of euros injecting into financial sector. The unemployment rate is
12.2% in 2013 up from 11.4% last year. Therefore, the eurozone growth forecast
is projected to contract 0.3% but expected to be grow at 1.1% in 2014.
Asia economic growth is outperforming the
world
Asia
may not be booming, but it is growing sustainably. Hence IMF expects Asia to
grow at 5.7% in 2013 (with growth in emerging Asia reaching 7.2%), contributed
from strong growth in China and some ASEAN economies. Consumption and private
investment will be encouraged by continued robust domestic demand, favorable
conditions in labor market, and low unemployment rate in several countries.
Furthermore, Chinese demand and Japanese stimulus provide a boost to the
region. We present the outlook of some leading countries in Asia which are
China, Japan, India, and South Korea.
China: According to in data from The
National Bureau of Statistics of the People’s Republic of China or NBS, China’s
economy grew 7.8% in 2012 which is the slowest rate in 13 years, and authorities
set their growth at a conservative 7.5%. This is the result of lower exports
from declined demand in US and European markets.
Japan: Japan’s economy is gradually
recovering. According to the statement of Bank of Japan and Japanese
government, they upgrade its outlook of the economy as there is an upturn in
exports and factory output. However the economic condition is still
questionable because the exports rose just 3.8% in April which is below
expectations of 5% gain from a Dow Jones Newswires survey and 5.9% increase
from Reuters.
India: IMF lowered its forecast on India’s
economic growth to 5.7% this year from its January forecast of 5.9% and also
revised its 2014 growth forecast 6.2% from 6.3%. Downgraded economic outlook is
caused by decreased investments and demand. India’s economic troubles are shown
in high inflation and negative atmosphere among businesses and consumers.
South Korea: The South Korea’s
finance ministry lowered its 2013 growth target to 2.3% from its estimate of 3%
on March because of declined exports and sluggish domestic consumption.
Domestic consumption plays a vital role in
boosting Southeast Asia economic growth
Rising private investment, increased
intra-regional trade and higher domestic consumption are the main drivers to
continue Southeast Asia’s growth momentum, while Europe is facing recession and
US is not showing the clear sign of recovery. As a result, Asian Development
Bank (ADB) forecasts GDP growth in developing Asia of 6.6% in 2013 and 6.7% in
2014 while the region’s growth was 6.1% in 2012. As presented below, Standard
Cartered has a positive view on the Southeast Asia Economy.
Indonesia: In spite of faster inflation, strong
household consumption and investment drive the real GDP growth from 6.2% in
2012 to 6.5% this year and 6.8% in 2014.
Malaysia: Malaysia economy is mainly driven by
domestic spending and likely to enjoy sustained investment growth in 2013. Standard
Cartered forecasts GDP economic growth to slow to 4.7% this year from 5.6% in
2012.
Singapore: The Singapore economic growth is estimated
to be 1.3% in 2012, following a weak 1.3% in 2012. Singapore’s growth outlook
is viewed to be subdued.
Vietnam: Vietnam has approved a master plan to boost the economy which is
concentrated on restructuring the banking sector and state-owned enterprise
during the 2013 -2020 period. Vietnam economy is expected to show mild recovery
in 2013 with its GDP growth of 5.5% this year from 5% in 2012.
