In the holiday-season euphoria, analysts appear to have become excessively upbeat about Asia’s economic prospects for 2006.
According to Credit Suisse First Boston’s latest forecast, the 10 biggest economies in Asia outside Japan will expand at a weighted average rate of 7.5 percent next year. Three months ago, CSFB’s prediction for 2006 growth was just 6.4 percent.
China and India, the region’s two biggest economies, are expected to race ahead, expanding 10.1 percent and 8.5 percent respectively, while gross domestic product in smaller economies — from South Korea and Hong Kong to Singapore and Malaysia — will grow between 4 percent and 6 percent, CSFB says.
While an optimistic outlook for Asia is hardly implausible, it’s important to recognize that there are risks.
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