mr funny
01-08-11, 01:49
http://www.businesstimes.com.sg/sub/news/story/0,4574,449317-1311796740,00.html?
Published July 27, 2011
2007-17 may be a replay of 1987-97 for Asia
Businesses should also watch China closely: economist
By CHEN HUIFEN
THE regional economic outlook for the 10 years up to 2017 could look a lot like the 10 years which led up to the Asian financial crisis in 1997, according to DBS Bank chief economist David Carbon, who cautioned yesterday that businesses should keep an eye on China as well, apart from what's happening in the US and Europe.
Speaking at a talk titled 'The Economy and Your Business: What headwinds ahead do companies face?', Mr Carbon pointed out that the decade before 1997 was a period of capital inflows, with many Asian countries posting faster-than-average GDP growth and inflation.
'It all became a little bit too much, if everybody remembers, and then it finally popped in 1997,' said Mr Carbon, who is also managing director for economic and currency research at DBS. 'In the next 10 years, basically what we have is the exact opposite of that. Everything that got wound up in this 10-year period got unwound in the next 10-year period.'
And so, post-1997, Asia started a decade of deleveraging, leading to lower GDP growth rates, and below-average inflation. 'And now, we are sitting here in 2010 and saying 'what are we looking at in the future', and we think it's gonna look a lot like this original 10-year period (of 1987-1997),' he said.
The good thing is that there seems to be a general expectation of a cyclical correction, which means businesses are better prepared than they were in previous crises, said CIMB Research executive director Song Seng Wun. He noted that despite concerns over debt woes in Europe and the US, there is no panic in the markets.
'So this recession - if it comes - it's very interesting in that while we've got governments in trouble, most companies are very strong,' said Mr Song. 'They are sitting on tonnes of cash. So that's the difference in terms of us heading into the headwind this time around. We are much better prepared, which is why we don't get the (previous) kind of swings.'
However, he told the audience to brace themselves for a wobbly recovery in the US as it will take years for the world's largest economy to deleverage to normalcy. Meanwhile, opportunities still abound in Asia, where a '4-6 per cent growth in the near term is quite doable'. He is optimistic that warmer ties between Singapore and Malaysia will also boost both economies.
To help companies navigate in the months ahead, Mr Song highlighted key indicators such as temporary jobs data in the US, tourist arrivals and auto sales in the region as signposts to watch. The last indicator he found to be very useful in gauging the level of economic activity on the ground because 'whether you are doing business legally or illegally, whether you are pirating DVDs . . . or moving fertilisers in Patpong or durians to Singapore, you need transportation', he said.
Other than that, Mr Carbon also reminded the audience that China will be key to watch as Asia's economic wellbeing is increasingly dependent on China and less on the G-3. Growth there may continue to moderate as authorities grapple with inflation.
Providing food for thought, Mr Song noted that there are more and more tall buildings - a reflection of economic excess - in Asia.
'One thing we see is that when there is too much money going around, there will be a lot of fraud, there will be a lot of funny stuff going on,' he said.
'And these will come through only when growth starts to slow down as well . . . The next crisis, when it comes, may not necessarily be from Europe or from the US but it could be again back to Asia, mainly because there is too much money sloshing around.'
The talk featuring Mr Carbon and Mr Song was organised by Action Community for Entrepreneurship (ACE), The Business Times and The SME Magazine. M1 and Grand Copthorne Waterfront Hotel were the enterprise partners for the event.
Published July 27, 2011
2007-17 may be a replay of 1987-97 for Asia
Businesses should also watch China closely: economist
By CHEN HUIFEN
THE regional economic outlook for the 10 years up to 2017 could look a lot like the 10 years which led up to the Asian financial crisis in 1997, according to DBS Bank chief economist David Carbon, who cautioned yesterday that businesses should keep an eye on China as well, apart from what's happening in the US and Europe.
Speaking at a talk titled 'The Economy and Your Business: What headwinds ahead do companies face?', Mr Carbon pointed out that the decade before 1997 was a period of capital inflows, with many Asian countries posting faster-than-average GDP growth and inflation.
'It all became a little bit too much, if everybody remembers, and then it finally popped in 1997,' said Mr Carbon, who is also managing director for economic and currency research at DBS. 'In the next 10 years, basically what we have is the exact opposite of that. Everything that got wound up in this 10-year period got unwound in the next 10-year period.'
And so, post-1997, Asia started a decade of deleveraging, leading to lower GDP growth rates, and below-average inflation. 'And now, we are sitting here in 2010 and saying 'what are we looking at in the future', and we think it's gonna look a lot like this original 10-year period (of 1987-1997),' he said.
The good thing is that there seems to be a general expectation of a cyclical correction, which means businesses are better prepared than they were in previous crises, said CIMB Research executive director Song Seng Wun. He noted that despite concerns over debt woes in Europe and the US, there is no panic in the markets.
'So this recession - if it comes - it's very interesting in that while we've got governments in trouble, most companies are very strong,' said Mr Song. 'They are sitting on tonnes of cash. So that's the difference in terms of us heading into the headwind this time around. We are much better prepared, which is why we don't get the (previous) kind of swings.'
However, he told the audience to brace themselves for a wobbly recovery in the US as it will take years for the world's largest economy to deleverage to normalcy. Meanwhile, opportunities still abound in Asia, where a '4-6 per cent growth in the near term is quite doable'. He is optimistic that warmer ties between Singapore and Malaysia will also boost both economies.
To help companies navigate in the months ahead, Mr Song highlighted key indicators such as temporary jobs data in the US, tourist arrivals and auto sales in the region as signposts to watch. The last indicator he found to be very useful in gauging the level of economic activity on the ground because 'whether you are doing business legally or illegally, whether you are pirating DVDs . . . or moving fertilisers in Patpong or durians to Singapore, you need transportation', he said.
Other than that, Mr Carbon also reminded the audience that China will be key to watch as Asia's economic wellbeing is increasingly dependent on China and less on the G-3. Growth there may continue to moderate as authorities grapple with inflation.
Providing food for thought, Mr Song noted that there are more and more tall buildings - a reflection of economic excess - in Asia.
'One thing we see is that when there is too much money going around, there will be a lot of fraud, there will be a lot of funny stuff going on,' he said.
'And these will come through only when growth starts to slow down as well . . . The next crisis, when it comes, may not necessarily be from Europe or from the US but it could be again back to Asia, mainly because there is too much money sloshing around.'
The talk featuring Mr Carbon and Mr Song was organised by Action Community for Entrepreneurship (ACE), The Business Times and The SME Magazine. M1 and Grand Copthorne Waterfront Hotel were the enterprise partners for the event.