‘Pessimism’ over Asia-Pacific growth: survey

Saturday, 5 November 2011 00:00 - - {{hitsCtrl.values.hits}}

SINGAPORE (AFP): The struggling US economy and eurozone debt crisis have sparked a “growing sense of pessimism” about Asia-Pacific’s economic growth in the next year, a regional think tank said Friday.

Expectations for growth are at their lowest levels since the last global economic slump in 2008, the Pacific Economic Cooperation Council (PECC) said in a report based on a survey of over 400 business executives, academics, central bankers and senior government officials.

“Sixty-five percent of respondents believe real GDP (gross domestic product) growth will be much weaker in the next twelve months compared to the previous year,” PECC said.

Only ten percent of respondents felt the region’s economy will be stronger over the period, it added.

“Our annual survey of opinion leaders reflects the growing sense of pessimism about the economic outlook... The last time pessimism was this high was in 2008 just as the (previous) crisis was breaking,” PECC said.

Slower US economic growth, the eurozone debt crisis and energy security were the top risks to Asia-Pacific’s economic growth according to the respondents.

“The rising sense of pessimism is consistent across the region, even though the outlook for large emerging market economies is somewhat more positive,” the report said.

“Even in the case of China, the number of respondents expecting growth to slow down in China narrowly exceeds those who believe in a rosier outlook.”The International Monetary Fund said last month it expects average growth of 6.3 percent in 2011 and 6.7 percent in 2012 for Asia, slightly below its forecast of 6.8 percent and 6.9 percent respectively in April.

The IMF also lowered its growth forecast for China to 9.5 percent in 2011 from April’s forecast of 9.6 percent and 9.0 percent in 2012 from 9.5.

PECC’s survey was carried out in August, and the organisation’s Secretary General Eduardo Pedrosa said the pessimistic sentiment could have been worse if the respondents were polled now.

“People out there are expecting things to take a turn for the worse next year,” Pedrosa told AFP.

“What’s really changed (since the survey was taken) is that there is an increasing concern over Europe. It was already very high as the second-highest risk when the survey was taken in August,” he added.

Euphoria from a financial rescue plan for debt-ridden Greece cobbled by European leaders had been short-lived after Prime Minister George Papandreou said he would put the deal to a referendum.

He later backed down after incurring the ire of other European leaders, but analysts have said the region’s fiscal crisis was far from over.