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China and India maintain strong economic growth, US outlook clouded

21-Oct-2005

SYDNEY (Centre for Asia Pacific Aviation) -  The Chinese economy continued to surge ahead, expanding 9.4% in the third quarter and maintaining the same rate of growth over the first nine months of 2005.

The National Bureau of Statistics stated that the recent oil price increase would have a “limited” impact on the economy (although the airline sector is clearly feeling the effects of soaring fuel prices on its bottom line). The Indian economy is also continuing its strong growth. Indian GDP is expected to expand by at least 7% in the year ending Mar-06 – its third consecutive year of growth above 7%.

Rapid rates of growth in these countries will assist the governments to continue to invest in the aviation sector, including new aircraft and airport infrastructure.

Meanwhile, the leading economic indicators in the US decreased sharply in Sep-05, reflecting the impact of the recent hurricanes. The Conference Board stated that the Leading Index has been slowing steadily since mid-04, while the growth rate of real GDP has slowed to a 3.3% annual rate in 2Q05, down from 4.3% in 1Q05. The Conference Board concluded, “although it is too soon to tell if the negative impact of the hurricanes on the leading index will be lasting, the recent behaviour is still consistent with the US economy continuing to expand more moderately in the near term”.

Moderating growth in the US economy could signal further weakness in cargo exports from Asia, an indicator to be closely watched.

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