Things may slow from great to good in Asia, but certainly not to disastrous.
The initial estimate of Singapore's third quarter gross domestic product, out earlier Wednesday, is a good barometer of the health of the Asian economy.
To be sure, Singapore is buffered by a booming property market and by a rise in financial service business, but it also remains an export-oriented economy, mostly of pharmaceutical and technology goods.
That means it reflects how things are going in other parts of the region, given Asia's broad reliance on exports - to the U.S., to Europe and within the region.
If there's an impact being felt from a slowdown in U.S. demand, it would likely be showing up in Singapore's figures.
But data show that third quarter GDP increased a solid 9.4% on-year. That compares with the average forecast of a Dow Jones Newswires poll of seven economists for GDP to increase 9.1% on year, and against a 8.6% rise in the second quarter.
On an annualized and seasonally adjusted basis, the economy expanded 6.4% versus a forecast 5.6% rise, though that was slower than the 14.4% growth in the second quarter.
Construction, manufacturing and service sector output readings were all solid. That indicates Singapore's economy is holding up well in the face of offshore headwinds.
The data may not cover the worst of the recent volatility in financial markets (and some say more is to come), but there are positives here.
Other key Asian economies will start releasing preliminary third quarter data in the coming weeks. Readings so far on manufacturing output, exports and the like have shown resilience, and there's no reason to expect GDP data to be any different.
Intra-Asian trade is helping shield economies around the region from a downturn elsewhere.
Asian consumer demand hasn't deteriorated sharply. Recent data from Australia showed August retail sales were up a higher-than-expected 0.7% (the market had been looking for 0.4%). In Hong Kong, August retail sales grew at the strongest pace in six months, with sales by value up 15.0% on year versus a 12.3% gain forecast.
Also, despite the negative headlines and much concern about the U.S. housing market, there are no major signs that U.S. consumers are curtailing spending.
More reassurance on that front could come on Friday with the release of U.S. September retail sales data. A Dow Jones Newswires poll forecasts overall sales to have risen 0.3%, the same as August, with sales, ex-autos, 0.4% higher after a 0.4% decline in the previous month.
Americans have long spent beyond their means, leading to a national savings problem. To be sure, bad news could still come on the U.S. economic and credit-market front, and the real impact from August's subprime-related financial market woes may not be felt for some months.
It is dangerous to presume no headwinds remain. The U.S. consumer could finally catch a cold. The commodity cycle could break if demand slows from China in particular.
It's worth noting that Singapore's central bank warned in its policy statement earlier Wednesday that the economy is expected to moderate. But that doesn't imply a major regional downturn. So far, the indications are that Asia is coasting along in acceptable fashion, and will continue to do so.
The initial estimate of Singapore's third quarter gross domestic product, out earlier Wednesday, is a good barometer of the health of the Asian economy.
To be sure, Singapore is buffered by a booming property market and by a rise in financial service business, but it also remains an export-oriented economy, mostly of pharmaceutical and technology goods.
That means it reflects how things are going in other parts of the region, given Asia's broad reliance on exports - to the U.S., to Europe and within the region.
If there's an impact being felt from a slowdown in U.S. demand, it would likely be showing up in Singapore's figures.
But data show that third quarter GDP increased a solid 9.4% on-year. That compares with the average forecast of a Dow Jones Newswires poll of seven economists for GDP to increase 9.1% on year, and against a 8.6% rise in the second quarter.
On an annualized and seasonally adjusted basis, the economy expanded 6.4% versus a forecast 5.6% rise, though that was slower than the 14.4% growth in the second quarter.
Construction, manufacturing and service sector output readings were all solid. That indicates Singapore's economy is holding up well in the face of offshore headwinds.
The data may not cover the worst of the recent volatility in financial markets (and some say more is to come), but there are positives here.
Other key Asian economies will start releasing preliminary third quarter data in the coming weeks. Readings so far on manufacturing output, exports and the like have shown resilience, and there's no reason to expect GDP data to be any different.
Intra-Asian trade is helping shield economies around the region from a downturn elsewhere.
Asian consumer demand hasn't deteriorated sharply. Recent data from Australia showed August retail sales were up a higher-than-expected 0.7% (the market had been looking for 0.4%). In Hong Kong, August retail sales grew at the strongest pace in six months, with sales by value up 15.0% on year versus a 12.3% gain forecast.
Also, despite the negative headlines and much concern about the U.S. housing market, there are no major signs that U.S. consumers are curtailing spending.
More reassurance on that front could come on Friday with the release of U.S. September retail sales data. A Dow Jones Newswires poll forecasts overall sales to have risen 0.3%, the same as August, with sales, ex-autos, 0.4% higher after a 0.4% decline in the previous month.
Americans have long spent beyond their means, leading to a national savings problem. To be sure, bad news could still come on the U.S. economic and credit-market front, and the real impact from August's subprime-related financial market woes may not be felt for some months.
It is dangerous to presume no headwinds remain. The U.S. consumer could finally catch a cold. The commodity cycle could break if demand slows from China in particular.
It's worth noting that Singapore's central bank warned in its policy statement earlier Wednesday that the economy is expected to moderate. But that doesn't imply a major regional downturn. So far, the indications are that Asia is coasting along in acceptable fashion, and will continue to do so.
No comments:
Post a Comment