Credit Suisse Raises Emerging Asia Growth Expectation

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Credit Suisse economists expect the growth outlook of most emerging Asia countries to improve in the second half of 2009 as the global economy slowly moves into a healing phase. In a recently published Emerging Markets Quarterly Q3 2009 report, Credit Suisse revised up its 2009 GDP growth forecasts for the region to 4.7% from 4.4% for 2009, and to 7.3% from 6.7% for 2010 (all on weighted basis).

Excluding China and India, non-Japan Asia real GDP growth rates for full-year 2009 will likely contract by 2%. Negative annual growth rates, however, reflect declines in GDP that have already happened in Q4 2008 and Q1 2009. Going forward, Credit Suisse economists expect industrial production to grow on a quarter-on-quarter basis, albeit gradually.

Credit Suisse economists maintain their China 2009 GDP growth estimate of 8% but have revised up their 2010 estimate to 9% (from 8.5%). India GDP growth forecast has been raised to 6.2% (for India fiscal year beginning in April 2009), and Indonesia from 2.8% to 3.6% for full-year 2009. "We believe the Chinese economy bottomed in Q1 2009, thanks to the effective implementation of fiscal stimulus and monetary expansion," said Dong Tao, Credit Suisse Chief Regional Economist for non-Japan Asia. "The focus has shifted away from 'when is the bottom' to 'when to tighten', but the process is likely to be slow and mild."

Mr Tao added: "China's continued monetary expansion also brings the threat of inflation next year. We are have revised up our year-end consumer price index forecast from 2.5% to 4.1% year-on-year for 2010."

In India Credit Suisse economists point to a sooner-than-expected pick up in industrial output for their optimism. Industrial production expanded 1.4% year-on-year in April 2009 against average declines of -0.17% year-on-year during January to March 2009. The recent election result, which was well received by the market, is likely to increase capital flows to India, including foreign direct investment and portfolio inflows.

Commenting on Federal Reserves' monetary policy, Tao said that Credit Suisse does not expect the Fed to raise interest rate until the second half of next year.

Enquiries:

• Josephine Lee,Corporate Communications Credit Suisse,Tel. +852 2101 6041

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