Financial Times

Slower US, China economic growth this year-economist
While global economies like the US one are slowing, countries in Asia like China and India are showing fast growth, a top economist said. Dr Arup Raha, chief economist of HSBC’s Asia-Pacific region, told The Sunday Times FT that Asia was a good place to invest as it is the fastest growing region in the world, is much stronger than the pre crisis (1989) years and there are good companies here.

Any particular countries that would attract investments? “I think generally it’s China and India where the structures and prospects are good.” He said growth in India was strong and expected to be around 7-8 percent this year with good monsoon rains as against a positive growth rate of 7 percent last year. “The outlook in India is very strong,” the HSBC economist said, adding that some of that growth potential would spill over to countries in the region like Sri Lanka.

Before Tuesday’s interview, Raha addressed a breakfast meeting in Colombo for CEOs on the “Global economic outlook and Asia’s changing position.”
In a wide-ranging presentation, the scenario he painted was one of a global economy hit by slower growth in the US, a structurally weak dollar and China easing on its rapid growth momentum.

He said 2004 was the best year for growth in global economies, a growth rate unlikely to be seen this year. Oil prices, he added, would hover around the $60 per barrel level.

Raha said world attention was shifting away from Japan where much-touted reforms in the corporate and banking sectors didn’t work out exactly the way they should have.

On consumerism, he said consumers have stopped savings and are spending all they have while the US Fed is the only Central Bank to raise interest rates. “I don’t think there is a risk of inflation even though prices may rise.”
On China where growth has been phenomenal and over nine percent in the past few years, Raha said this kind of momentum is slowing down. “A slower China has a lot of implications for Asian exports to China.”

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