The Philippine and Taiwanese economies probably grew at the weakest pace in at least a year last quarter as a rebound in exports eased and Asian nations wound down stimulus measures.
Philippine GDP increased 6 percent in the three months through last month from a year earlier, according to the median estimate of 13 economists surveyed by Bloomberg News. Taiwan’s economy also expanded 6 percent, according to the median of 11 economists. Both release GDP data on Monday.
“Asia’s growth is normalizing and demand recovery will be a lot more tempered this year,” said Vishnu Varathan, a Singapore-based economist at Capital Economics (Asia) Pte. “Advanced economies such as the US and Europe are still on a lethargic path and we are starting to see the effects of monetary and fiscal stimulus being withdrawn in Asia.”
Easing shipments abroad may damp profits of Asian exporters such as Taiwan’s HTC Corp (宏達電), the world’s largest maker of handsets using Google Inc’s Android and Microsoft Corp’s Windows operating systems.
Taiwan’s exports, which are equivalent to about two-thirds of its US$355 billion economy, rose at a slower pace for a second straight month last month. Shipments abroad make up about 30 percent of the Philippines’ US$161 billion economy and growth in overseas sales eased to a 12-month low in November.
Philippine President Benigno Aquino plans to expand the economy 7 percent to 8 percent this year to cut poverty and boost incomes. Aquino is asking investors to help build more than 700 billion pesos (US$16 billion) worth of roads, schools and bridges in a nation where the World Bank estimates one out of four people live on less than US$1.25 a day.
Bangko Sentral ng Pilipinas is watching inflation risks even as it expects consumer-price gains to remain within target, Governor Amando Tetangco said this week. Policymakers last month forecast inflation will average 3.6 percent this year, compared with their target of 3 percent to 5 percent.
“We still believe that the stance of monetary policy continues to be appropriate,” Tetangco said. “Our forecast shows that it is going to be well within the inflation target for this year and next year.”
Taiwan predicts GDP growth of 4.82 percent this year, compared with a 10.24 percent expansion last year according to the median of 10 estimates in a Bloomberg News survey. The country raised borrowing costs three times last year and tightened lending rules, seeking to avert a property bubble.
Taiwan has also raised the reserve requirement on some local-currency deposits by foreigners to as much as 90 percent, seeking to restrain the country’s currency by discouraging inflows of “hot” or speculative investment.
Economic growth is forecast to moderate in Asian economies from Singapore to South Korea this year. The city-state expects an expansion of as much as 6 percent, down from 14.7 percent last year. The Bank of Korea projects South Korea’s GDP will increase 4.5 percent, compared with last year’s 6.1 percent, which was the fastest pace since 2002.
Malaysia’s central bank left interest rates unchanged on Thursday for a third consecutive meeting, as slowing growth reduced the scope for rate increases. The country’s GDP rose 5.3 percent in the third quarter, the slowest pace last year.
Still, the pace of the expected expansion in Asia may add to price pressures stoked by higher food and energy costs. The IMF this week urged emerging countries to closely watch the rise of asset-price bubbles as inflation risks increase.
“In advanced economies, activity has moderated less than expected, but growth remains subdued,” the IMF said in an update to its World Economic Outlook report. The institution added that in “many emerging economies, activity remains buoyant, inflation pressures are emerging, and there are now signs of overheating, driven in part by strong capital inflows.”
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