Asia Pacific Economy: Country Outlook

Australia:
Boosted with a fiscal stimulus, the Australian economy, especially the services sectors, are showing signs of recovery. While the nation’s economy is not facing any contraction, experts believe recovery may not be strong. Some key sectors such as housing, automobiles, and industrial equipment received boost from the fiscal stimulus. The real boost, however, is predicted to come from exports to China. With Australia’s key trading partners expected to grow strongly in 2010, rising investments in commodities and natural resource projects are expected to fuel Australia’s recovery. Australia’s public debt is 14% of its GDP. Although Australia’s economy is in good shape than before, businesses are still cautious and may remain so till 2Q 2010. A strengthening Australian Dollar and possibility of further hikes in rates by the Reserve Bank of Australia (RBA) shall also influence the overall economy.

China:
Growth in China accelerated during 2H 2009 and the nation’s economy is on the rise. Industrial production increased at 10.3% in 2009. 2010 promises to be a good year for China. The Purchasing Managers Index (PMI) increased to 56.6 in December 2009 from 55.2 in November 2009. The PMI surge covered all industries. The National Bureau of Statistics reported an improvement in the quarterly business climate index in China. The index grew to 130.6 in 4Q 2009 from 124.4 in 3Q 2009. The Chinese economy is likely to outperform other global economies riding on increasing domestic consumption and recovery in exports. However, to realize its 2010 vision, China must tackle credit expansion and industrial overcapacity.


Japan:
Japan’s economic outlook for 2010 is still plagued by high unemployment rate and deflation. Japan’s dependency on exports may well lead the nation into a sustainable growth from the fragile recovery it witnessed in 2Q 2009 and 3Q 2009. The PMI for December 2009 rose to 53.8 from 52.8 in November 2009, a decent recovery. Sustainable recovery, however, depends on the exchange rate as well. Yen has strengthened considerably against most major currencies. Japan also needs to control public debt, which is currently nearing 200% of its GDP.