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Global and Asian Economies
Recovery across the Board
World economic growth accelerated at a fast pace in
2004, marking the cyclical recovery of the global
economy after three years of slow growth. The global
economic engine was predominantly revved by China's
strong GDP growth of more than 9% over the last two
years, and buoyant household consumption in the US.
The Economist Intelligence Unit (EIU) estimated that
the world economic growth was 4% in 2004, compared
with 2.6% growth in 2003.
Asia remained the fastest growing region in the world,
spearheaded by the phenomenal growth in China.
China's robust economic growth was underpinned by
rising demand at home and abroad. In 2004, China
accounted for more than 20% of the increase in world
trade volumes. Its share of world exports has also
doubled from 2.9% to 5.8% between 2000 and 2004.
To manage fears of overheating, the Chinese
government implemented administrative measures
and credit controls to rein in excess investments and
consumption to avert a hard landing. As the measures
filtered through the system, the economy slowed down
to a less frenzied pace as the growth of fixed asset
investment, industrial output and consumer and
producer prices moderated.
Japan saw its economic recovery stalled in the fiscal
year ending 31 March 2005. On a seasonally-adjusted
basis, the world's second largest economy contracted
for three consecutive quarters, shrinking by 0.1% in
the last quarter of the year after a 0.3% and 0.2% fall
in the two previous quarters respectively. However,
the Japanese government is optimistic that economic
expansion will resume from the latter half of 2005,
underpinned by growth in exports and consumption.
For Asia ex-Japan, the positive knock-on impact of
a strong Chinese economy has provided an economic
uplift. The more mature economies of Singapore, South
Korea, Hong Kong and Taiwan grew between 4.6%
and 8.4% in 2004. Elsewhere in the region, GDP
expanded by 7.1% in Malaysia, 6.1% in Thailand and
the Philippines, and 5.1% in Indonesia. Consumer
spending continued to make significant contribution in
all these economies, while fixed investment spending
has recovered substantially since late 2003.
On the political front, 2004 was also an eventful year
for Asia, with numerous elections held smoothly in
several countries. Most notable was the peaceful
transition of leaderships in India and Indonesia. The
more stable political climate has raised hopes of a new
era of growth and stability in these two countries.
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