|
|
|
| Sunday, 21 August 2005 |
 |
|
 |
Business |  |
| News Business Features Editorial
|
Global economic outlook and Asia's changing position Global economy is robust with the development of the two largest economies of the world, USA and China but the risk of an economic slowdown is increasing said well known economist Dr.Arup Raha. Dr. Raha, the chief economist, Asia-Pacific of the HSBC was addressing a seminar organised by the HSBC for its customers recently. Year 2004 was the best year for growth with USA recording 4.4%, Japan 2.7% and Euro zone at 1.7%. People in the US are optimistic about the economic outlook as the corporate sector savings are increasing while the household sector is not saving. US net household saving is negative (borrowing) and remain at minus 4% from 2001. Growth is one of the reasons for the increase in corporate profits but there is no increase in salaries due to the huge labour force available in China and India. German companies forced down wages and the downward trend in the real wage rate growth started from early 2002, he said. Though US enjoys positive growth there won't be investments inside or outside US while the focus has been shifted from Japan too. Japan did some reforms in banking and corporate sectors but Japan's growth is dependent on exports. The interesting phenomena is the behaviour of consumers in the US. The technology bubble burst in 2000 now it is the housing bubble. The US households are not saving at all and the buoyancy in the property market is a result of this. This is a risk and it is one reason that the Federal Reserve increased interest rates. Fed rates increased from 2.25 to 3.75% and it is likely to continue rising until it reaches 4 % in November and peaks at 4.25% in December, Dr Raha said. US and UK consumer spending is weaker than in the late 1990's. Real consumption growth in the US was over 5.5% in 2000 and in 2005 it has dropped to 3.8%. In UK it was 5.75% in 2000 while it dropped to 2.5% in 2005. |
|
| News | Business | Features
| Editorial | Security
| Produced by Lake House |
