Trade, Tourism Drive Growth, Fueling Hopes Region Can Maintain Gains without State Stimulus
By ALEX FRANGOS And CRYSTAL HSU
HONG KONG—Taiwan and Thailand reported their fastest growth in several years as surging trade, private consumption and tourism fuel hopes that Asia can maintain growth without the help of government stimulus.
Gross domestic product in Taiwan soared 9.2% in the fourth quarter on a year-to-year basis, its highest pace in 5½ years and more than three percentage points faster than expected by many economists. Strong exports and private consumption drove the rebound. On a seasonally adjusted, annualized basis, the economy grew 18%, according to Goldman Sachs.
Thailand's GDP grew at its quickest pace in 10 years, expanding 3.6% in the fourth quarter from the July-September period. Compared with a year earlier, GDP rose 5.8%. Exports, tourism and agriculture all rebounded, leading the government to upgrade its 2010 forecasts. On a seasonally adjusted, annualized basis, the Thai economy grew 15.3%, according to Barclays Capital.
Coming after Singapore and Japan reported stronger-than-expected growth last week, the latest data underscore that while China's economy dominates headlines, "there's a very nice story building in the rest of Asia," says Bill Belchere, chief economist at Mirae Asset Securities in Hong Kong. The increase in tourism is a positive sign for disposable income. "It's a signal that confidence is coming back. People are making some money."
Taiwan , Thailand Join Asia's Rise
If sustained, increased employment and private-sector business investment could propel Asian growth. Companies are making money again, boosting investment, and consumers are more confident, as job security returns. In a sign of increased consumer demand, auto sales in Malaysia increased 33% in January from a year earlier, according to the Malaysian Automotive Association.
The strength of the export recovery has surprised many, implying perhaps that demand in the West for apparel, consumer electronics and other items is stronger than expected.
Asia's gains also are benefiting some U.S. companies, which already are seeing brisk business from countries in the region.
Asia continues to be the among the strongest regions for Huntsman Corp., a U.S. chemical manufacturer, Chief Executive Peter Huntsman told analysts last week, according to a Thomson Reuters transcript. The company sees a contrast between economic conditions in Asia and Europe.
"We're seeing a robust demand … in the Asia-Pacific and Latin America markets, while the recovery in Europe, which is our largest market, is more modest," Mr. Huntsman said. He added that demand in North America has begun to grow. Sales volumes were up 25%, year over year, in Asia and the Middle East, compared with 4% growth in the Americas.
"We continue to see Asia being the real engine for growth here," he said. About 23% of the company's business activities are in the Asia Pacific region.
Taiwan, Thailand Join Asia's Rise
Another U.S. manufacturer, Goodyear Tire & Rubber Co., also highlighted performance in Asian markets in reporting its earnings.
In a recent earnings call, CEO Robert Keegan said the recovery "obviously varies by geographic region." Company executives said the Asia Pacific region was the only area to experience year-over-year profit growth.
"We had strong winter replacement tire sales in Europe, and obviously the robust economic growth in China and India are positive signs of better times to come," Mr. Keegan said during last week's call. "However, commercial-truck tire sales for the industry are not expected to rebound dramatically in 2010, as key tonnage metrics in the U.S. and Europe remain weak."
In Asia, Taiwan has benefited from a thawing of relations with mainland China and an increase in trade and travel. Tourists from China have flooded into Taiwan, boosting private consumption. The number of Chinese tourists visiting Taiwan in the fourth quarter rose to 284,272, up 170% compared with last year. Overall tourism arrivals were up 22% to 1.2 million, said Tsai Hung-Kun, director of the agency's Bureau of Statistics.
Taiwanese computer maker Acer Inc., the world's second-largest by market share after Hewlett-Packard Co., said recently that profit rose 18% last quarter compared with the year-earlier period.
Acer Chairman J.T. Wang said Monday that January's sales declined less than usual compared with December. January is usually a slow sales month following the holiday buying season. Mr. Wang says he expects sales to increase as much as 40% this year.
Taiwan , Thailand Join Asia's Rise
Tourism also recovered in Thailand, a travel hub that notched up 1.63 million visitors during the fourth quarter, a 40.8% gain from a year earlier.
Much of the region's recovery has been linked to the rebound in technology spending and inventory buildup in the West.
In Thailand, where electronics are an important industry, exports increased and factories picked up hiring in the fourth quarter.
On a year-to-year basis, Thailand's net exports added 7.1 percentage points to growth, coming off the massive downturn in trade at the end of 2008. Private and government consumption also added to growth, while inventories continued to be a drag, though far less than during previous quarters.
Intra-Asian trade has boosted corporate profits. Charoen Pokphand Foods PCL, Thailand's largest food producer reported Friday a threefold increase in net profit in 2009 to $306 million from 2008.
The company's chief executive, Adirek Sripratak, says the company will spend $180 million this year to expand to markets in Philippines, Russia and India.
The return to growth also is raising concerns over inflation, and increasing the likelihood that central banks in the region will continue to move away from the extraordinarily loose monetary policy in place since the financial crisis.
— Sara Murray, Piyarat Setthasiriphaiboon and Perris Lee Choon Siong contributed to this article.Printed in The Wall Street Journal, page A13