Goldman Sachs cuts Asia growth forecast

Ulhas Joglekar ulhasj at SPAMbom4.vsnl.net.in
Tue Oct 24 20:46:56 MDT 2000


Saturday
21 October 2000

Goldman Sachs cuts Asia growth forecast
SINGAPORE: Investment bank Goldman Sachs has lowered its 2001 economic
growth forecast for Asia, excluding Japan, to 5.7 percent from 6.1 percent,
citing the region's sluggish domestic investment.
"After a surprisingly sharp rebound in 1999, the pullback in recovery
momentum we have been expecting is starting to materialize," Goldman Sachs
said in a quarterly report.
The 5.7 percent gross domestic product forecast for 2001 represents a full
percentage point slowdown from the 6.7 percent growth rate expected this
year.
Gross domestic product measures the value of all goods and services
produced. The biggest drag on the region's economic growth will come from
South Korea, Thailand and Indonesia, where excess production capacity and
problem loans in the banking system are still unresolved, the report said.
Restoring economic health will require "time and more public money," the
report added.
It said weak domestic demand across the region is expected to keep inflation
in check, letting central banks keep interest rates low to support financial
system restructuring in most Asian countries.
However, there are exceptions. Domestic demand is beginning to pick up in
China, Hong Kong and Singapore with the start of a new credit cycle, the
report said. (AP)
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