S&P lowers Asian GDP growth forecasts

“We have lowered our base case forecasts of 2012 real GDP growth by about half a percentage point for China to 7.5%; Japan to 2.0%; Korea to 2.5%; Singapore to 2.1%; and Taiwan to 1.9%,” S&P credit analyst Andrew Palmer says.

We have also revised our forecast down by about one percentage point each for: Hong Kong, to 1.8%; and India, to 5.5%. For Australia, the forecast is marginally down to 3.0% from 3.2%. The forecasts for other Asian economies remain unchanged except for the Philippines, which went to 4.9% from 4.3%, reflecting the ongoing strength of that domestic economy."

“Our lower forecast for China recognises that the central government had elected not to inject an economic stimulus of a size and speed necessary for an 8% growth rate. It appears that the approach by the Chinese authorities remains influenced by the unpleasant experience of the inflationary effect, particularly on real estate prices, of the stimulus they initiated in late 2008-2009,” Palmer says.

In turn, the China slowdown has a flow-on effect to the export-oriented Asian economies of Japan, Korea and Taiwan, and the trading port cities of Hong Kong (in particular) and Singapore. The slowdown in China and the economies in the Eurozone and US have also resulted in lower commodity prices.