from an email i received from CLSA.
Many people I spoke
to yesterday were shocked at CLSA's new economics forecasts for
Asian GDP in 2009. "Seasonally weak" (in the Christmas quarter??),
"you can't extrapolate forward from one quarter's data", "headline
grabbing" were comments I got.
Eric Fishwick (CLSA's chief economist) held a number of
conference calls yesterday, and his explanation for the cuts (and
our shock at the low numbers) is that there is still a lack of
recognition of how weak 2008 ended and what this means for a 2009
forecast.
Australia 0.0% 4Q08
estimated by CLSA
Hong
Kong -2.1% 4Q08 estimated by CLSA
Indonesia 0.1% 4Q08
estimated by CLSA
Korea
-3.8% 4Q08 actual
Malaysia -1.9% 4Q08
estimated by CLSA
Philippines 1.8% 4Q08
actual
Singapore -4.5% 4Q08
actual
Taiwan
-7.1% 4Q08 estimated by CLSA
Thailand -2.3% 4Q08
estimated by CLSA
So, if Singapore GDP is unchanged in each quarter of this
year CY2009 growth will still be -4.5% year on year (bear in mind
that QoQ GDP growth has been negative in four of the last five
quarters and fell 4.5% in 4Q08 alone. Putting our forecast in
context, a -10% GDP decline is not so crazy after all.
Sadly,
we think other economists will need to follow us in revising down
their numbers very sharply.
In most cases 2008 ended so weakly that this "starting
point" for 2009 GDP is a (large) negative number vs the full year
2008. This provides the context for the massive downgrades that we
have seen in our 2009 growth estimates.
The table below shows what happens if GDP growth on a QoQ
basis is zero in each of the quarters of this year (ie remains flat
and does not get any worse than it was in Q4 08). Eric first had to
estimate 4Q 08 GDP for those countries that have not yet announced,
based on manufacturing output, retail sales etc.
