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ADB cuts 2003 growth forecasts for Singapore, S Korea

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  • Sg_Review@yahoogroups.com
    cuts in Central Provident Fund contributions to sap consumer confidence 30 September 2003 1743 hrs (SST) 0943 hrs (GMT)
    Message 1 of 1 , Sep 30, 2003
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      cuts in Central Provident Fund contributions to sap consumer confidence

      30 September 2003 1743 hrs (SST) 0943 hrs (GMT)

      ADB cuts 2003 growth forecasts for Singapore, S Korea

      By Philippines bureau chief Twink Macaraig

      The Asian Development Bank (ADB) is slashing its growth forecasts for
      Singapore and South Korea this year, citing weak consumer spending in
      the two countries.

      But it is more bullish about Singapore and Asia as a whole in 2004.

      The Manila-based institution is revising its GDP forecast for Asia as
      a whole next year from an earlier prediction of 5.9 per cent to 6.1
      per cent.

      "The recovery in the industrial countries is now projected to firm up
      substantially during the second half of 2003 and particularly in
      2004, benefiting the region's economies, hence aggregate GDP growth
      for the region in 2004 has been revised upward to 6.1 percent," the
      bank said in its update.

      The ADB's latest outlook shows the region's economies holding up well
      this year despite the multiple shocks of terrorist threats, SARS,
      volatile oil prices and the Iraq war.

      "In 2003, the cost of SARS in terms of lost GDP was about US$18b in
      nominal terms for developing Asia as a whole. This corresponds to an
      absolute loss of about 0.6 percent of GDP in 2003," said ADB chief
      economist Ifzal Ali at a briefing to reporters on the update in
      Manila on Tuesday.

      Still, it expects Asia to grow an overall 5.3 per cent this year,
      with China continuing to power inter-regional trade.

      But the strength is patchy, with stronger forecasts for those
      countries focused on domestic-led growth and weaker forecasts for
      those overly dependent on the external sector.

      Singapore and South Korea, the ADB says, are seeing their economies
      weighed down by poor domestic demand.

      In Singapore's case, the ADB is blaming partially SARS but it also
      expects upcoming cuts in Central Provident Fund contributions to
      further sap consumer confidence.

      However, going forward the ADB is more optimistic.

      It expects Singapore to see the fruits of recent structural changes.

      "If you look at 2004 and beyond, you can see growth coming back in
      the range of 4.5%-5% because of measures taken domestically and
      external markets should improve," said Jean-Pierre Verbiest, ADB's
      assistant chief economist.

      The ADB is raising its growth forecast for China this year to 7.8%
      per cent, but it also warns of "overheating" even though it is
      restricting lending to certain sectors like real estate.

      Thailand is also seen as a top performer, along with some surprise
      rising stars in Central Asia like Turkmenistan, Azerbaijan and
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