Asia Leads Global Recovery After Unexpected U.S. Slip: EconomyChinmei Sung and Karl Lester M. Yap
The Philippine and Taiwan economies grew more than forecast last quarter, and Singapore’s jobless rate fell to a five-year low, signaling an upswing at the end of 2012 that underscores Asia’s role leading a global recovery.
In the Philippines, gross domestic product grew 6.8 percent from a year earlier, while Taiwan reported a preliminary 3.42 percent gain and upgraded its full-year growth forecast. Singapore’s unemployment was 1.8 percent.
Asia’s resurgence as China rebounds contrasts with the U.S. yesterday reporting an unexpected decline in gross domestic product after defense spending plunged. Meantime, Japan’s economic outlook depends on Prime Minister Shinzo Abe reviving wages and spending, with less-than-forecast industrial output for December highlighting the challenge ahead.
“Asia is leading the global recovery,” said Glenn Levine, an economist at Moody’s Analytics in Sydney, who has covered Asian economies for almost eight years. “China has started to gather momentum as the various domestic stimulus policies kick in and that lifts the region. Southeast Asia is doing very well autonomously.”
Taiwan raised its forecast for this year’s growth to 3.53 percent from 3.15 percent as China’s economic rebound boosted its imports, underscoring President Ma Ying-jeou’s case for closer trade and investment ties. The island plans to allow more visitors and securities investment from the mainland, and let domestic lenders conduct business in yuan by early February.
Taiwan’s shipments to China, its largest trading partner, rose 12.6 percent last month from a year ago, an earlier report showed, and Taiwan Semiconductor Manufacturing Co., the world’s largest contract producer of chips, has forecast first-quarter sales surpassing estimates as demand outstrips expectations.
“China’s economy has bottomed out and it was the key driver for Taiwan’s growth in the fourth quarter, as exports recovered,” said Ma Tieying, an economist at DBS Group Holdings Ltd. in Singapore. “The recent measures will also contribute to growth in Taiwan’s services sector this year,” said Ma, whose 2013 GDP forecast for the island is 4.2 percent.
Taiwan’s central bank held the discount rate on 10-day loans to banks at 1.875 percent last month after inflation eased from a four-year peak in August. The economy grew 1.25 percent in 2012, the statistics bureau said today.
Exports growth may be 6.07 percent, more than a previous prediction of 5.11 percent it said, and raised its inflation forecast for this year to 1.31 percent from 1.27 percent, with pressure seen from higher minimum wages and a planned electricity tariff increase.
“Taiwan is a nice barometer for the region and indeed for the global economy, given they are such an export-manufacturing led economy,” said Levine. “The fact that the fourth-quarter number was above expectations and showed a sharp acceleration does bode well for the region.”
Taiwan’s benchmark Taiex index fell 0.1 percent as of 11:39 a.m. local time. The Taiwan dollar was little changed at NT$29.574 against its U.S. counterpart.
Elsewhere in the Asia-Pacific region today, Japan’s industrial production rose less than estimated in December from the previous month. New Zealand’s central bank left its benchmark interest rate at a record-low 2.5 percent while signaling concern about rising house prices.
In Europe, Germany reports retail sales for December and unemployment and preliminary inflation for January. France may say consumer spending rose 0.2 percent in December from a month earlier, unchanged from November’s pace, based on a Bloomberg survey of analysts. U.S. consumer spending probably rose at a slower pace in December than in November, according to a Bloomberg survey ahead of a report due today.
In Singapore, the seasonally adjusted jobless rate fell to 1.8 percent last quarter from 1.9 percent in the previous three-month period as companies hired more local workers after the government tightened the inflow of foreign labor.
Philippine President Benigno Aquino’s efforts in transforming the nation into one of the region’s fastest-growing economies have led to Google Inc. opening an office this month and Ayala Land Inc. unveiling plans to build more hotels. Standard & Poor’s last month raised the country’s sovereign rating outlook to positive, citing improved governance and public finances, and taking it closer to an investment grade.
The Philippine peso has risen about 6 percent in the past 12 months, the best performer among 25 emerging-market currencies tracked by Bloomberg. The Philippine Stock Exchange Index climbed to a record this month.
Central bank Governor Amando Tetangco said yesterday he’s studying more measures to counter excessive capital inflows lured by growth, joining South Korea and Singapore in warning that policy makers need to consider more steps to reduce the impact of such funds.
The nation’s fiscal situation is well under control, with the budget deficit within target, Finance Secretary Cesar Purisima said today after the data release. Bangko Sentral ng Pilipinas last week refrained from cutting its benchmark rate after four cuts in 2012 and as capital inflows boost the peso.
The monetary authority targets inflation to average 3 percent to 5 percent until 2014. Export growth eased to 5.5 percent in November from a 6.1 percent pace the previous month as an uneven global recovery sapped demand.
The Philippines is forecast to be among the 10 fastest-growing economies in 2013 and 2014, according to a Bloomberg survey. Indonesia will report GDP data on Feb. 5, with the central bank estimating last month growth was 6.2 percent in the fourth quarter, matching the pace of the previous three months.