Possible External Shocks to Asia in 2001: How Vulnerable Are the Regional Economies?

Threats to Asia's economic growth are looming larger in 2001, with evidence of economic deceleration in the world's major industrial economies increasingly discernible since mid-2000. Slower economic growth in the U.S. and the European Union has cast some doubt on the near-term economic growth prospects of the Asia-9 countries in 2001. By and large, economic growth is in the Asia-9 to slow down from the average 7.3% in 2000 to an average 4.5% projected for 2001. Other than a slowdown in global economic growth, a possible sharp deceleration in the global electronics cycle cannot be ignored. The Asia-9's export performance tends to move in tandem with global semiconductor sales. However, as the economic forecast shows strong growth rate in global semiconductor sales over the next few years, a deep plunge in the global electronics cycle is unlikely. Furthermore, a sharp deceleration in global electronics demand would not appear imminent, unless world economic growth were to fall so drastically as to crimp the quest for productivity growth through technological improvements.