Bloomberg News

HSBC Cuts Asia Growth Estimates on Export Risks, Market Turmoil

October 06, 2011

Oct. 6 (Bloomberg) -- HSBC Holdings Plc cut its economic growth estimates for most Asian economies, citing threats to exports and the impact of sliding stocks and currencies.

Europe’s debt crisis and a struggling U.S. expansion signal Asian exports “will almost certainly take a large hit,” HSBC said in a report received today. Domestic demand “will also throttle down” as currencies and capital markets fall, with Asia excluding Japan growing 7.3 percent in 2011 and 2012, lower than earlier projections of 7.5 percent for both years, it said.

HSBC joins Goldman Sachs Group Inc. in dimming its Asian outlook after Europe’s plight and the threat of a recession in the U.S. roiled global markets. While the expansion in Asia will slow, Chinese growth will “hold up” and regional liquidity is “ample,” which should help avert a sharper deceleration, according to HSBC.

“The risks are certainly rising with every week that policy uncertainty persists in the West,” Hong Kong-based Frederic Neumann, co-head of Asian economics at the bank, said in the report. Still, Asia “may just avoid cracking under pressure” aided by China, he said.

HSBC cut its 2011 and 2012 projections for gross domestic product growth in Hong Kong, Indonesia, South Korea, Malaysia, Singapore, Taiwan, Thailand and Vietnam. It lowered 2012 predictions for Japan and New Zealand.

Europe’s biggest bank left its 2011 and 2012 estimates for China, India, Australia and the Philippines unchanged. It predicts 8.9 percent growth in China this year and an 8.6 percent expansion next year.

Interest-Rate Pause

Emerging-market central banks from China to Brazil have left interest rates unchanged in recent weeks or cut borrowing costs to shield expansion. About $8.4 trillion has been wiped off stocks worldwide this year on concern the global economy faces a slump.

Asia is capable of injecting stimulus if another financial crisis flares, Nicholas Kwan, the Hong Kong-based regional head of research at Standard Chartered Plc, said in a report today.

That would help lift Asia out of any “deep” recession, he said. The region remains “too small to single-handedly lift the world out of recession,” he also said.

Goldman Sachs this week reduced its global growth estimates for 2011 and 2012, predicting recessions in Germany and France as the European economy stalls and the risk of a contraction in the U.S. grows. It reduced its 2012 economic growth prediction for Asia excluding Japan to 7.1 percent from 7.8 percent.

--Editors: Sunil Jagtiani, Paul Panckhurst

To contact the reporters on this story: Sophie Leung in Hong Kong at; Stephanie Phang in Singapore at

To contact the editor responsible for this story: Paul Panckhurst at

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