It appears that 2002 will be a transition year in which Asia finally untangles itself from the mire of the 1997-1998 crisis and settles into a pattern of sustainable growth in private sector consumption. Nevertheless, growth will be spotty and the region remains vulnerable to high energy prices and sociopolitical instability.
On the average, PPP per capita will increase in Asia thanks to economic expansion of between 4.5 and 5 percent during 2002. Purchasing power gains will be greatest in Asia's two demographic powerhouses: China and India. The benefits of economic expansion have yet to trickle down to unindustrialized regions of the country, but purchasing power is up in industrial cities of the east and south. China's GDP expansion of 7.3 percent during 2001 was enough to boost household consumption in industrialized regions, and that trend should continue through 2002 and 2003 as GDP expands an estimated 7.0 and 7.4 percent respectively.
China's membership in the WTO bodes well for double-digit gains with Chinese trade, which will contribute to growth in household goods sales in excess of 8 percent during the second half of 2002. As the benefits of economic expansion trickle down during 2003, household consumption should retain the same pattern of healthy expansion. Fueled by expanding exports within the framework of the WTO, year-on-year gains in industrial consumption should surpass the 10 percent mark during the second half of 2002 and maintain that pace through the first half of 2003.
India will be the driving force behind solid growth in private sector spending in South Asia during 2002. GDP expansion of 6 percent during 2002 will contribute to modest but steady growth in household consumption during the second half of 2002 and throughout 2003.
As India gradually breaks out of its protectionist cocoon, the demand for imported consumer goods will increase, especially among households located in major urban areas. A synergy will develop between India and East Asia this year, with India supplying an increasing amount of software support and East Asian nations supplying more high-tech hardware to India.
Indian industry continues to turn to domestic sources for industrial inputs, but will increasingly turn to other regions of the world for capital goods needed for industrial expansion. Purchases of industrial capital goods should rise by more than 5 percent (year-on-year) during the second half of 2002 and surpass 8 percent during the...