INTERNATIONAL -- ASIAN COVER STORY
Asia: Is This the Rebound?
Exports are up, chip orders are rising, bourses are booming. But the region is far too reliant on the U.S.
Earlier this year, Zip drive maker Iomega Corp. (IOM ) laid off 15% of the workers at its factory in Penang, Malaysia. The U.S. economy remained weak, and orders for the San Diego company's CD and Zip drives had dried up. Now, to the delight of the company's Malaysia-based execs, the order drought seems to be ending. Such customers as Philips Electronics (PHGZF ) and Sony Corp. (SNE ) are once again in the market for Iomega products, and the Penang factory is humming seven days a week. Says a surprised Iomega (Malaysia) President Joseph J. Adams: "Things look very good at this point."
Not long ago, Adams and other executives in Asia were expecting gloomy conditions for another two quarters at least. Few predicted the U.S. economy would recover so fast. And while the rosy forecasts could give way to a more sober assessment, Asia seems set to profit from a revival in U.S. demand for the region's chips, PCs, DVD players, petrochemicals, and home appliances. "By July or August," says P.K. Basu, a Singapore-based economist with Credit Suisse First Boston, "exports should be growing at a spanking pace."
As a result, growth forecasts are being revised upward--and some analysts see a solid recovery well into 2003. Excluding Japan, Asia may grow 7% this year. That's up sharply from last year's 5.1%, thanks to powerhouse China. Despite the higher growth, inflation should fall to less than 2%. "I am quite sure Asia will recover this year," says Takuma Hatano, executive director for Asia and Oceania at the Japan Bank for International Cooperation in Hong Kong.
If this feels like deja vu, it should. Three years ago, Asia's export-dependent economies roared out of the regional financial crisis that had laid them low in 1997. While many forecasters expressed amazement at the rebound, skeptics argued that Asian nations were merely exporting their way out of trouble and juicing domestic demand with deficit spending.
Sure enough, the skeptics were right. As the likes of Thailand, Malaysia, and the Philippines racked up impressive export tallies, their policymakers and executives proved unable to fix structural weaknesses in their financial and corporate sectors, which were still burdened with mountains of debt. Because banks weren't lending, these nations never kindled domestic demand. As a result, when the U.S. sank into recession, most of Asia tanked, too.
With growth expected to start again, the question is whether the region has begun enough structural reform to reduce its unhealthy reliance on the American market. Will Asian nations use this nascent rebound to achieve self-generating growth? Or are they doomed to be a virtual economic colony of the U.S., contracting pneumonia every time America catches a cold?
The short answer is that some nations seem set to get it together--and some don't. Japan? Not likely; the economy is in its third recession in a decade. Ditto for Indonesia, which is hobbled by inept policymaking, and Hong Kong, whose currency link to the U.S. dollar is holding back growth. "We have a really wide variation in growth rates, from 1.5% to 7%," says Salomon Smith Barney economist Cliff Tan in Singapore. "It's definitely not like the old days where a rising tide lifted all boats." The countries likely to prosper the most from a U.S. rebound are China, South Korea, Malaysia, Singapore, the Philippines, and Taiwan. Even so, growth in some of these economies will remain anemic--certainly compared with the rates of the 1990s--meaning they may not be able to generate sufficient lift to escape the global boom-bust cycle. "The whole region is caught up in the recovery euphoria," says Tan. But "as the Fed begins to tap on the brakes in the second half of this year, you are going to see who has legs."
Clearly, those nations that have been restructuring and reforming in recent years will lead the pack. At the top of the list: South Korea. Under President Kim Dae Jung, the country has curbed the worst excesses of the chaebol, which once absorbed much of the nation's capital. The government also recapitalized Korea's banks enough to get them functioning again, and by the end of last year nonperforming loans were just 3.5% of total credits, down from 13% in 1999. Hence, the banks are healthy enough to lend to Korean consumers for the first time ever, and domestic consumption is expected to account for as much as 80% of economic growth this year.
For the results, look no further than the malls and car dealerships of Seoul. Lee Min Sun, a human resources manager at a foreign company, recently bought a $235,000 flat and a $15,200 locally built Nissan. "Of course, I wouldn't have bought them if I thought the economy would turn sour," says Lee, 42. To help finance the purchases, she took out a $30,400 loan at 6.5%, the lowest interest rate in decades. Consumers such as Lee are prompting economists to raise 2002 growth forecasts to 5% vs. 3% last year.
Korean manufacturers of every stripe are also getting an export lift. Battered South Korean chipmaker Hynix Semiconductor Inc. (HXSCF ) posted its first operating profit in almost a year during the first two months of 2002. Samsung Electronics says it's hoping to more than double last year's $2.2 billion profit, thanks to higher chip prices and strong demand for its mobile phones and other consumer electronics. "Things look much more promising than we had thought," says Chang Il Hyung, senior vice-president at the world's largest memory chipmaker. And it's not just high tech. Kia Motors Corp. is targeting a 13% increase in shipments to the U.S. this year, to 254,000 vehicles, following a stellar 39% gain in 2001. Thanks to robust local demand, Pohang Iron & Steel Co. (PKX ), the world's largest steelmaker, just announced price hikes of almost 6% on shipbuilding and construction material, the first since 1998.
Given Korea's dominance in chips, analysts expected it to rebound first. What's surprising are the patches of strength in Southeast Asia, a region many economists had written off as being incapable of either competing with China or fixing its manufacturing base and financial systems. Yet consumer spending has been unexpectedly robust in Southeast Asia. Record-low interest rates, banks' new willingness to lend to consumers, and pent-up demand is powering domestic consumption--reducing a dangerous reliance on exports.
Consider Thailand. It is still plagued with excess capacity in petrochemicals, cement, and commercial real estate. But the banks have cut the crushing burden of bad loans from $72 billion at the peak of the crisis to some $10 billion. The workout has given banks a chance to lend again, especially to consumers. In January, reports John Parker, Ford Motor Co.'s president of Association of Southeast Asian Nations (ASEAN) operations, Thais bought 24,727 cars, 45% more than they purchased a year before. Homes are selling briskly, too. Land & Houses Co., Thailand's largest homebuilder, reckons it will sell 20% more new homes this year. At the same time, Thais are gorging on credit-card debt. David Hendrix, the Thai Farmers Bank executive in charge of retail banking, says spending per card grew 25% last year, to $200 per month.
One factor that may increasingly drive the region's uptick is the willingness of some leaders to swallow the pill of reform. In Thailand, the previous government lifted restrictions on foreign investment in retail, helping spur a shakeout and giving consumers an incentive to shop. Singapore has thrown open its telecom market and moved to liberalize its cossetted banks. It also has started to restructure state-controlled companies in an effort to make them more competitive.
Especially surprising is the resolve being shown in Malaysia, where Prime Minister Mahathir Mohamad has begun sacrificing businessmen who only recently could expect unconditional state support. Since mid-2001, the government has taken the helm at debt-ridden conglomerate Renong and Malaysia Airlines--both formerly controlled by well-connected businessmen--and has begun restructuring them aggressively. And while the bad debt overhang remains, much-needed bank mergers are moving ahead. "Rightly or wrongly, people have always associated Malaysia with crony capitalism," says Catherine Vlasto, who runs Genesis Investment Management Ltd.'s $40 million London-listed Malaysia Maju Fund. "I think that period is firmly behind it, and the outlook is bright."
Putting a damper on all the bright news, of course, is Japan, the regional laggard. The Japanese economy is expected to contract 1.3% in the fiscal year ending Mar. 31. Ominously, capital investment continues to shrink. Private-sector machinery orders in January fell a surprising 15.6%--the worst performance in more than a year--auguring continued economic weakness. Barclays Capital Japan economist Mamoru Yamazaki expects the economy to shrink 0.6% during the coming fiscal year. Still, even though Japan as a whole may not benefit from a U.S. recovery, some companies will get a lift, especially ones like Matsushita Electric Industrial Co. (Panasonic) and Sharp that have moved a lot of production to China and Southeast Asia.
All of which means that China will continue to be the regional powerhouse, sucking away foreign investment from capital-starved Southeast Asia. Exports from China, meanwhile, have jumped 14% so far this year. It's not as though China is getting all the action, though. Singapore won a big vote of confidence in January, when Advanced Micro Devices Inc. of Sunnyvale, Calif., and Taiwan's United Microelectronics Corp. (UMC ) announced a multibillion-dollar 12-inch wafer plant for the island state. This is on top of UMC's $3.6 billion joint venture with Germany's Infineon Technologies (IFX ), scheduled to open in 2005. Singapore's cluster of suppliers and top-notch infrastructure helped it snag the investments. "For leading-edge technologies, we feel Singapore is a better place than China," says UMC investor relations head Liu Chitung.
There is another, beneficial side to China's increasing dominance: "Competition from China is invigorating a process of lowering trade barriers in the rest of Asia," says Don Hanna, chief Asia economist for Salomon Smith Barney. In fact, CSFB's Basu predicts that intra-Asian trade will grow 10% to 15% this year. Fully 60% of exports from Malaysia, Singapore, and Indonesia go to the rest of Asia. For example, a disk drive made by China's Legend Computer Inc. contains parts made in Malaysia and Singapore that are assembled in Thailand. At the same time, China will become a key market for everything from Thai rice to Korean mobile phones.
The recovery in the U.S. will have to last if Asia is to bounce back strongly. Companies in much of the region are not yet hiring. And foreign direct investment has yet to recover the levels of the mid-1990s. Growth in the region will continue to be uneven. And there's plenty that can go wrong. With a revived U.S. economy and a steadily growing China, however, Asian companies that have retooled at least have a fighting chance.
아래는 한국경제에 나온 배경설명입니다.
미국의 경제성장 전망이 잇따라 상향조정되고 있다. 전문가들은 미국경제가 내년까지는 순항할 것으로 보고 있다. 일본을 제외한 아시아는 올해 7% 정도 성장할 것이다. 이는 지난해 5.1%보다 훨씬 높은 수준이다. 물론 중국 덕분이다. 높은 성장률에도 불구하고 인플레이션은 2% 이하로 유지될 것이다. 하지만 아시아 경제는 겉보기와 달리 허약하다. 3년 전 아시아의 수출의존형 경제는 금융위기로부터 탈출하는 데 성공했다. 상당수 전문가들이 단기간의 경제회복에 대해 찬사를 보냈다. 하지만 일부에선 아시아 국가들이 적자재정을 편성해 내수를 자극하는 데 골몰했으며 자신들의 고통을 '수출'했다고 폄하하고 있다. 결국 회의론자들의 견해가 옳았다. 태국 말레이시아 필리핀 등은 괜찮은 수출실적을 보이고 있지만 금융 및 기업부문에선 구조적인 취약성을 보여줬다. 이 부문은 아직도 빚더미에 허덕이고 있다. 미국이 경기침체에 빠지게 되면서 아시아 대부분의 국가들도 똑같은 운명을 맞게 됐다. 이제 경기가 다시 좋아지고 있다. 문제는 아시아 국가들이 미국시장에 대한 의존도를 낮출 수 있을 만큼 충분한 구조조정을 했느냐 하는 것이다. 아시아 국가들이 이번 경기회복 시기를 자생력을 기르는 기회로 삼을 수 있을까. 아니면 미국이 감기에 걸릴 때마다 폐렴을 앓는 '경제 식민지'로 전락할 것인가. 일부 국가들은 이미 해답을 갖고 있다. 하지만 일본은 분명 아니다. 일본은 지난 10년새 벌써 세번째 경기침체에 들어섰다. 인도네시아도 똑같다. 자국통화가 미국달러에 고정된 홍콩도 성장 정체 상태에서 벗어나지 못하고 있다. 미국의 경기회복으로부터 가장 큰 혜택을 받을 나라들은 중국 한국 말레이시아 싱가포르 필리핀 대만 등이다. 하지만 이들 국가의 성장률 역시 만족할 만한 수준은 아니다. 지난 90년대와 비교하면 특히 그렇다. 이것은 아시아 국가들이 세계경제의 '성장-침체' 사이클에서 벗어날 수 있을 만큼 충분히 성장할 수 없다는 것을 의미한다. 최근 성공적인 구조개혁을 진행해온 국가로 단연 한국을 꼽을 수 있다. 한국은 국가 자본의 상당부분을 점유하던 재벌 규제를 단행했으며 은행이 제 기능을 할 수 있도록 만들었다. 한국의 부실채권 규모는 지난 99년 전체의 13%에서 지난해말 3.5% 수준으로 낮아졌다. 하지만 지역경제를 어둡게 하는 것은 역시 '아시아의 낙제생' 일본이다. 올 1분기 성장률은 마이너스 1.3%를 기록할 것으로 예상된다. 중국은 상황이 정반대다.
동남아시아로 갈 외국인 투자까지 싹쓸이하고 있을 정도다. 수출도 호조를 보여 올 들어 수출이 14% 급증했다. 중국의 경제적 영향력이 커지면서 긍정적인 부수효과도 나타나고 있다. 역내 무역장벽이 낮아지고 있는 것이다. 전문가들은 올해 역내무역이 10∼15% 늘어날 것으로 기대하고 있다. 아시아 경제가 다시 뛰어오르기 위한 전제조건은 미국 경제 회복이다. 아시아 지역의 실업문제는 여전하며 외국인 직접투자액도 지난 90년대 중반수준을 회복하려면 멀었다. 하지만 미국과 중국경제가 지속적으로 성장해준다면 아시아 기업들은 세계시장에서 한 번 싸워볼 만하다.
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