Asia Economic Monitor:

India - Solid Q3 Growth Numbers Underpins Continuing Creditworthiness
The Indian economy continued its strong expansion with GDP growing by 9.2% y/y (all figures y/y) in Q3, versus 8.9% in Q2 and 9.3% in Q1. These three results suggest that overall growth for teh entire year may exceed 8%. Key drivers of the economic expansion included trade, transport, and communications (+14%), manufacturing (+12% y/y), finance and insurance (+9.5%), and construction (+9.8%). The key agriculture sector, which still employs about half the population, registered growth of only 1.7%. Given much of the manufacturing output is for domestic consumption, the strength of the manufacturing sector is quite telling can be used as a proxy for domestic demand. As a result, while India's domestic demand appears to be quite robust, overall growth should dip next year as a result of tightening by the Indian Central Bank to tackle inflation, and slowing global growth. Expect growth to be in the 7-8% range - still respectable by any standards.

China - Growth Eases - somewhat - But Lots of Oomph Left in System
While GDP data indicated a continuing firm expansion in the third quarter 2006 (Q3/06) of 10.7% y/y, only slightly less than the 11.3% y/y growth registered Q2/06, industrial production (IP) in October slowed unexpectedly to 14.7% y/y, lower than the 16.1% y/y registered in September. At this point there are two possible explanations for the slowdown. First, the mix of monetary and regulatory measures implemented by Chinese authorities to slow growth - particularly fixed investment - may be starting to bite. Second, as many of the goods produced in China are for overseas consumption, the slowing October IP figure may reflect the slower pace of orders placed by firms as a result of the world slowdown. But export growth has remained solid (with
October's merchandise trade balance setting a record high of US$23.8 billion, up from US$15.3 billion in September), and therefore it may be too early to tell if the slowdown is affecting exports. One last note: foreign exchange reserves may have exceeded $1 trillion. To sum up, China's growth remains strong.

Taiwan - Quarterly Growth Data Higher than Expected, But No Miracles Looking Ahead
Taiwan's rate of economic growth accelerated in the third quarter to 5.0% y/y following a 4.6% y/y rate of growth in Q2. Nevertheless, growth is expected to scale back in view of slowing world economic growth and slowing consumption by Taiwanese households. The issue of slowing world growth - particularly in the US - is particularly appropriate to Taiwan, given the reliance on high-value-added electronic goods which is among the country's export staples. This suggests that growth is expected to decline slightly next year, although remain at a still-respectable level of about 4%.