Following the Iraq War, Asia was effectively quarantined as a business hub due to SARS, which impacted its fundamental macroeconomic and microeconomic indicators. Regarding the former, second-quarter GDP figures were very weak in countries like China and South Korea, and negative in countries like Hong Kong and Singapore. The trend was consistent across the region: weak domestic demand and stagnant exports. In June and July, however, at the micro level, sectors such as transportation and consumer spending experienced a V-shaped recovery once fears surrounding the atypical pneumonia subsided. The recovery in consumer spending indicators was also very rapid. Investor confidence in Asian countries returned once the third-quarter results were no longer at risk.
The question is whether the fourth and subsequent quarters will also be good. "We don't yet have economic and business data, but there are indicators such as bond yields and commodity prices that do point to a sustained economic recovery," comments Carolina Viguria, fund manager at Renta 4. An improved outlook for the global economy would undoubtedly benefit Asia due to its dependence on foreign trade.
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