Results
to KWR Advisor Economic Survey – April/May Edition
To participate in the June KWR Economic
Survey CLICK HERE
Responses were received from readers in the United States,
North and Southeast Asia representing professions including
accounting,
legal and consulting services, public/investor relations, marketing/advertising
and manufacturing. Five questions were asked with responses
including:
1) How do you believe the Chinese economy will perform over
remainder of year? (Please rate on a scale of 1-10, 1 indicating
extreme
slowdown and 10 indicating 10 extreme growth)
Mean Answer: 6.43
Comments:
China's government appears to be under pressure to "share the
wealth" in rural areas. This will lead to lending and projects
that are based on non-economic factors, such as political appeasement.
That, in turn, will lead to overall lower rates of return. This
would not be such a grave concern if China didn't concurrently
face a non-performing
loan crisis. It is pretty hard to clean up bad loans if the overall
ROI is decreasing. I am not saying these events will manifest themselves
in the time frame of your poll, but that is the long-term trend
in my opinion. Consultant, Northeast U.S.
2) How do you believe the U.S. economy
will perform over remainder of year? (Please rate on a scale of 1-10, 1 indicating extreme
slowdown and 10 indicating 10 extreme growth)
Mean Answer: 5.43
Comments:
This is the toughest call. I can't put my finger on it, but something
about the rise in energy prices strikes me as phony and thus
temporary. G-7 countries continue to increase trade to each other
that flows
though China (i.e. GE makes a widget in China that is then exported
to Japan) but, outside of capital goods, exports and sales to
China as the final destination seem to be flattening. Therefore,
US growth
depends on the rest of G-7 growth, which, ironically, is somewhat
dependent on continued growth in China. That's what makes this
such a hard nut to crack. Bottom line, I see another low-growth,
deflation
scare on the horizon. Consultant, Northeast U.S.
There is a lot of momentum going into the second half of the
year. I do expect some slowing but not until late fall. Investment
Analyst
Specialist, West Coast U.S.
3) How do you believe the Japanese
economy will perform over remainder of year? (Please rate on a scale of 1-10, 1 indicating
extreme slowdown
and 10 indicating 10 extreme growth)
Mean Answer: 5.71
Comments:
Japan is the leader in creating phony inflation and it's not
hard to understand why. But the rest of the big economies are
all, in
varying degrees, latching on to the same strategy. The problem
is, Japan's track record in maintaining growth/inflation expectations
for more than a couple of quarters are dismal. The hope is that
suasion
on the part of players in high places (BoJ, Takanaka, Greenspan,
etc.) will spur private sector players to then fulfill these
prediction with actual economic activity, raising prices (most
importantly real
estate) and inflate their way out of NPL's. This is highly dubious
and hasn't worked yet. Consultant, Northeast U.S.
Relative to the last 10 years I would expect that as consumers
begin to "give in" to their pent up desires growth
in Japan will accelerate. Much as in America, when the next
door neighbor
gets
a new car or a remodeled kitchen, the Japanese will want
to keep up with the Joneses. Investment Analyst, West Coast
U.S.
4)
Do you
think government policymakers and investors should be more
concerned with deflation or inflation? (Please rate on
a scale of 1-10, 1
indicating strong concern about deflation and 10 indicating
strong concern about
inflation)
Mean Answer: 6.43
Comments:
This is a double edged sword:deflation if the currency
appreciates, inflation if the currency depreciates. In
this instance I think
Greenspan is correct the balance is equal between the two.
Investment Analyst,
West Coast U.S.
5) Are their any economic issues that you think may have
a major positive or negative impact on global financial
markets that
you think are not being adequately recognized today?
The rapid rise of US debt. Consultant, Northeast U.S.
The unwinding of the carry trades' impact upon foreign
currency and debt markets. Once again, portfolio flows
may wreak havoc
on economies;
much of it a result of the policy of the Federal Reserve
here in the US. Investment Analyst, West Coast U.S.
Consumer debt levels in the United States, and an unprecedented
level of indebtedness during wartime. Technology Consultant,
Japan
The long term importance of Asia to the world's future
growth and the potential risk of a simultaneous Indian
post-election
change
in policies and Chinese slowdown in growth. Legal Services,
Southeast Asia.
The preceeding information
is provided by:
KWR International, Inc.
New York, NY 10023
Phone: +1.212.532.3005
Fax: +1.212.799.0517
E-mail: kwrintl@kwrintl.com
Read
the KWR International Advisor Newsletter:
http://www.kwradvisor.co
