Here we list some countries to watch.

Cambodia

The Cambodian economy has seen rapid progress in the last decade. Per capita income, although rapidly increasing, is low compared with most neighboring countries and a large part of the country still relies on agriculture. Manufacturing output is varied but is not very extensive and is mostly conducted on a small-scale and informal basis. The service sector, driven by the country?s fairly large tourism industry based around the UNESCO World Heritage site of Angkor Wat, is heavily concentrated in catering-related services and trading activities.

Cambodia?s GDP grew an estimated 9.6 percent in 2007, about the same rate of growth the economy experienced from 2000 to 2006. Garment exports, by far Cambodia?s biggest industry, rose almost eight percent in 2007, while tourist arrivals, another big industry in the country, jumped nearly 35 percent. Foreign direct investment reached US$600 million, or about seven percent of GDP (slightly more than Cambodia received in official aid). Domestic investment, driven largely by the private sector, accounted for 23.4 percent of the GDP. Approximately 2,860 new businesses registered for operation in 2007, a 71 percent increase over 2006.

Concerned about inflation, the Cambodian government has also recently announced that it will spend more than US$300 million per year to keep gasoline and electricity prices down. “We will continue to support prices until oil drops below US$900 a ton,” Cambodian Minister of Economy and Finance Keat Chhon told the Phnom Penh Post recently.

Economic pressure from the global downturn will see Cambodia?s growth rate drop in 2008 to around 7.5 percent, reflecting a mix of growth in the services and construction industries and a slowdown in garment exports to the United States. Export growth will continue to slow as consumer spending in the United States slows and increased competition from Vietnam and the lifting of tariffs on Chinese textile exports becomes greater.

While exports will slow, Cambodia, like Vietnam and Laos, will continue to remain fertile for foreign investors interested in large infrastructure projects, as well as manufacturers and retailers focused on domestic markets.

India

India, the second most populous country in the world after China with a population at 1.1 billion, is currently the world?s fourth largest economy (based on purchasing power parity) and has achieved on average eight percent growth over the past three years. In the first quarter of this fiscal year, India achieved 7.9 percent growth compared to 9.2 percent the same period last year. India?s Finance Minister P. Chidambaram accrued the drop in growth rate to the overall deteriorating global conditions.

In 2007, the Asian Development Bank (ADB) agreed to provide India with up to US$500 million in loans to promote public-private partnerships to catalyze investments in infrastructure of up to US$3.5 billion.

According to the ADB, the serious lack of infrastructure is India?s Achilles? heel and is estimated to have cost the country three to four percent of the GDP annually. Funds will be channeled to the government-owned India Infrastructure Finance Co. Ltd. (IIFCL), which will provide funds at commercial terms with over 20-year maturity for infrastructure projects. This is creating funding avenues that are currently otherwise available.

The IIFCL had developed a financing plan for fiscal years 2007-2011 of US$6 billion, half of which will come from the Indian domestic market, including insurance, pension funds and the National Savings Scheme. The other half will come from international capital markets and bilateral and multilateral sources which include the ADB.

India Prime Minister Manmohan Singh recently told the Indian parliament that India, like other developing countries, was experiencing a “ripple effect” from the deepening world financial crisis and that the country “must be prepared for a temporary slowdown.” However, the Indian financial sector is tightly regulated and banks and financial institutions in the country remain well capitalized, so the sort of financial meltdowns that American and European banks have experienced is unlikely to happen.
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[ By Andy Scott, Managing Editor, China Briefing ]

It began in Thailand and quickly spread through the rest of the emerging economies of Asia. What had been hailed as ?the Asian economic miracle? and a great achievement by the IMF and the World Bank came crashing down in July 1997 when the Thai baht collapsed. Other regional markets followed and by the time Asia had recovered, President Suharto of Indonesia had been forced to step down, growth in the Philippines had all but stopped, and Malaysia had gone through its first recession in years.

Much like the current crisis, the Asian Financial Crisis came about when banks failed after borrowing heavily, leaving corporations starved for credit and having to drastically cut back on operations. Due to that crisis, most Asia banks are now much more cautious in their lending practices, and so, the current problems affecting Asia are less financial than economical. As part of a global supply chain that has for years trumpeted cheap exports from Asia?notably China?to the West, the Asian countries are now faced with dropping sales and increased prices as global trade slows.

The emerging countries of Asia are now trying to get their citizens to be more like the West, buying instead of saving. Consumer spending accounted for 35 percent of China?s economy in 2007, in the United States, consumers account for nearly 64 percent. Concerned about the impact of their export economies, Asian governments are beginning to implement policies to spur domestic spending. Thailand?s central bank has kept its benchmark interest rate unchanged to bolster confidence after two increases since July, while Vietnam?s central bank cut their benchmark interest rate in October by one percentage point to 13 percent in a bid to free up credit for enterprises. The monetary loosening reversed a series of three hikes this year, from 8.25 percent to 14 percent, which had aimed to reduce liquidity and curb the country’s double-digit inflation. ?Local cash-strapped companies will have the opportunity to get bank loans in order to maintain business and promote investment,? the State Bank of Vietnam said in an online statement.

While Asian consumers may remain wary in the face of the global downturn, governments of the region are hoping that consumers turn from saving to spending.

To know more, the whole issue is available (after a free subscription) on China Briefing website with others archives
For more information on China’s legal and tax issues or to ask for professional advices in related matters, please write to info@dezshira.com