Japan, U.S. growth set APEC scene
CNN's Geoff Hiscock, Asia Business Editor
(CNN) -- More signs of economic recovery in Japan and the United States, along with China's high growth rate, provide an encouraging backdrop for this month's APEC summit in Bangkok.
APEC's 21 members include five of the world's top 10 economies -- the United States, Japan, China, Canada and Mexico, plus another four in the top 20 -- South Korea, Australia, Russia and Taiwan.
Between them, the Asia Pacific Economic Community (APEC) economies account for 60 percent of global GDP and handle 47 percent of world trade.
As such, the health of the biggest APEC economies has a key bearing on the global economic outlook.
The latest pointer to a pickup in Japan is Wednesday's release of the Bank of Japan quarterly tankan survey, showing big business sentiment is at its highest level in three years.
That comes after the U.S. Commerce Department revised its figures for growth in the June quarter, saying GDP grew at a 3.3 percent annual rate. Some forecasters are tipping U.S. growth will rise to 4 percent or more for the rest of the year.
For China, the question is not so much the speed of economic growth -- likely to be about 8 percent this year, even with the second-quarter dip caused by the outbreak of the SARS virus -- but how best to handle external impacts and the need to cool the domestic property sector.
Among the outside pressures is the rise in protectionist sentiment in the United States, linked to perceptions that China's currency, the yuan, is undervalued, thus giving it a trade advantage.
How new Chinese leader Hu Jintao handles these pressures in his discussions with U.S. President George W. Bush will be one focus of the APEC summit that takes place in Bangkok from October 19-21.
Hu's meetings with Japanese Prime Minister Junichiro Koizumi and Russian President Vladimir Putin also will attract attention.
The U.S., Japan and China are indisputably the big three economically within APEC. Their combined output of about $15.4 trillion makes up more than 80 percent of APEC's total GDP of $19 trillion.
Canada and Mexico, both of which are expecting growth of about 2.5 percent this year, between them add another $1.3 trillion to the APEC total.
APEC's sixth-largest economy South Korea, which posted one of the advanced world's highest growth rates of 6.3 percent last year, fell into a hole in early 2003 as the government turned off the easy credit supply and tensions with North Korea increased.
That brought its economy to a shuddering halt in the second quarter, but a recent recovery means it will likely achieve reasonable growth this year.
An updated 2003 outlook released on Tuesday by the Asian Development Bank sees South Korea growing at 3.1 percent, the same as Taiwan. The figure for Hong Kong -- one of the Asian economies hit most severely by the SARS outbreak -- is 2.1 percent.
The ADB says that Southeast Asia should see a buoyant recovery in its external markets in the second half of 2003 after the bumpy ride stemming from SARS and global uncertainties earlier this year.
But it warns that the slow pace of financial restructuring and an uncertain global economy continues to cast a shadow.
Overall, it predicts Southeast Asia will grow 3.9 percent this year, with the strongest performances from Vietnam at 6.9 percent and APEC host Thailand with 6.0 percent. Malaysia should post 4.1 percent growth, followed by the Philippines with 4.0 percent and Indonesia with 3.4 percent.
Singapore, also hit-hard by SARS in the first half of 2003, will struggle to recover, particularly in services. The ADB projects growth of just 0.5 percent.
Russia, APEC's eighth-largest economy behind No. 7 Australia, is projecting growth of 6 percent this year, according to its Ministry of Economic Development and Trade.
Market-oriented restructuring and demand for commodities such as oil and gas set the scene for growth. But inflation continues to be a problem, with Russia's consumer price index likely to rise by 10 percent this year.