Thu, Jan 15, 2009 - Page 11 News List

Economy in Asia could recover as soon as Q2: HSBC

DPA , SINGAPORE

Asia’s economy might recover from the recession as early as the second quarter of this year, supported by governments’ policy responses to the downturn and the sharp drop in commodity prices, a news report said yesterday.

“The cavalry is on its way in the form of one of the most significant policy responses ever,” the Straits Times quoted HSBC senior Asian economist Robert Prior-Wandesforde as saying.

“The policy easing and sharp falls in commodity prices should lead to strong domestic demand, thus generating recovery in Asia,” he said.

Rounds of aggressive interest rate cuts and substantial stimulus packages in the region should spur domestic demand, the daily said, citing a HSBC media conference presentation.

But the bank cautioned that Asian economic recoveries might not be as fast as they have been in the past.

“Deep and sharp V-shaped recoveries have been the hallmark of Asia in the past, but we suspect that this time around, the second upward leg will not be quite as steep,” said HSBC, which made the forecast a week after another bank, BNP Paribas, projected a V-shaped recovery for Asia, which is a quicker rebound than the U-shaped slower recoveries.

HSBC also expected continued volatility in Asian stocks this year as “ultra-low interest rates and huge fiscal packages” meet global deleveraging.

It expected the regional markets to end either 10 percent higher or lower from their current levels, but added that it would not be as bad as last year when Asian equities dropped by 53 percent in value.

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