After slowing this year, Asian economic growth could rebound next year as government spending and interest rate cuts spur demand, BNP Paribas SA said yesterday.
Asia, excluding Japan and China, is forecast to grow 4.3 percent next year after a 1.4 percent expansion this year, Richard Iley, an economist at the bank, wrote in a report.
Public spending in China, Taiwan and South Korea, combined with increasingly loose monetary policy, should help to drive a “reasonably vibrant” recovery, he said.
Asian governments are planning more measures to boost growth as a slump in global demand hurts exports, deepening the region’s economic slowdown.
South Korea has pledged about US$30 billion in extra spending and tax cuts since September. China may follow a 4 trillion yuan (US$585 billion) spending package announced in November with a second plan as early as this month.
“The scale of the global policy response — monetary and fiscal — should ensure the recovery is more V than U-shaped,” Iley said. “In many instances, economies will experience a 6 to 7 percentage point swing in growth rates.”
Iley’s report — titled Asia: Apocalypse Now — said that before improving, Asia’s economic growth would deteriorate this year.
“Global industrial production appears to have collapsed at a 30 to 40 percent annualized rate since September,” he said, referring to the “biggest demand shock since the 1930s.”
As a result of the drop in output, BNP Paribas cut its forecast for Asian economic growth last year to 1.4 percent from a November prediction of 3.9 percent.
The region comprises Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand, according to BNP Paribas.
Iley said China is forecast to grow 7.7 percent this year, helped by the November fiscal package “worth an eye-popping” 14 percent of gross domestic product over two years.
The economy probably expanded 9.3 percent last year, slowing from 11.9 percent the year before. Iley predicted 8.1 percent growth next year.
Hong Kong is likely to grow 3.5 percent next year after shrinking 3.4 percent this year, the bank predicted.
Taiwan may expand 3.9 percent after contracting 3.3 percent; Singapore may grow 4.4 percent after declining 2.8 percent this year. South Korea may expand 3.2 percent, rebounding from a 2.4 percent contraction, the bank said.
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
VERTICAL INTEGRATION: The US fabless company’s acquisition of the data center manufacturer would not affect market competition, the Fair Trade Commission said The Fair Trade Commission has approved Advanced Micro Devices Inc’s (AMD) bid to fully acquire ZT International Group Inc for US$4.9 billion, saying it would not hamper market competition. As AMD is a fabless company that designs central processing units (CPUs) used in consumer electronics and servers, while ZT is a data center manufacturer, the vertical integration would not affect market competition, the commission said in a statement yesterday. ZT counts hyperscalers such as Microsoft Corp, Amazon.com Inc and Google among its major clients and plays a minor role in deciding the specifications of data centers, given the strong bargaining power of
RSS