MELBOURNE -- Gulf war jitters, while hurting many manufacturers, are helping Australia's car makers, whose exports go to Middle Eastern oil producing countries that are thriving on war-stoked oil prices, the chief economist of General Motors said on Tuesday.
"Despite all the uncertainty, the high oil prices are in fact creating windfall revenue for most of the Gulf countries," GM chief economist Mustafa Mohatarem said at a business forum in Melbourne.
"So in the near term you will see pretty strong export demand from that region."
Longer term, if a war in Iraq did not result in damage to Kuwait's oilfields and Iraq's economy opened up, Australian exporters could benefit from new demand for cars in Iraq, he said.
About one-third of the 824,000 vehicles a year produced in Australia are exported, with the local arms of General Motors, Toyota Motor Corp. and Mitsubishi Corp. all shipping cars to the Middle East.
Mohatarem said General Motors' view was that the global economy would improve in the second half of this year, led by a recovery in the United States, as long as a war in Iraq was not protracted.
"2003 is starting off on a pretty sour note, but we remain optimistic that things will turn around in the second half," he said.
However, he said people were taking it for granted that a war would be short and successful. An oil price shock that could trigger a recession remained a risk.
While China continued to grow rapidly, he warned that as much as 40 percent of bank loans to state-owned enterprises could be categorized as bad loans, an issue which he said China needed to manage despite its rapid growth.
"Growth covers up a lot of sins," Mohatarem said.
Chinese auto sales rocketed 39 percent last year to 3.4 million, and he said based on past growth rates in Japan, Korea and Brazil, it was reasonable to expect car sales in China to grow at between 10 and 20 percent a year over several years.
Mohatarem said the seven percent slowdown in U.S. sales of new cars and trucks in February was in line with the company's forecast that total U.S. vehicle sales would fall to around 16.5 million this year from more than 17 million last year.