An AFP story from Beijing says that Asia’s major economies reported a slew of gloomy news on Thursday showing the global crisis was hitting harder, as export-dependent nations feel the pinch from the worldwide slowdown:
- China’s economy slowed sharply in the final quarter of 2008 to 6.8 percent as thousands of factories that sold to overseas markets shut, pulling the full-year growth figure down to 9.0 per cent.
- South Korea’s economy was in the worst shape since the East Asian financial crisis a decade ago, following a 5.6 percent contraction quarter-on-quarter in the final three months of last year.
- Japan announced a 35 percent plunge in exports in December as consumers worldwide tightened their belts even more, driving Asia’s biggest economy further into recession. “Exports tumbled so much that you cannot believe your eyes,” said Naoki Murakami, chief economist at Monex Securities in Japan.
The three nations have the biggest economies in Asia, and the data reflected similar gloom across the rest of the region:
- National Australia Bank group chief economist Alan Oster described Asia’s economic health as “in a word, poor – and decelerating quickly. One of the big problems is when we look at industrial production and GDP across the region, we see quite rapid declines. Many of the region’s national economies were ‘trade-exposed’ and faced growing problems as global fortunes declined. We broadly see the global economy as going into a period where 2009 looks like its going to be the worst year since World War II.”
- Singapore reported on Wednesday it was facing its worst-ever recession after the economy contracted by 16.9 percent in the final quarter, its biggest fall on record.
What’s happening in China: as many as six million people from the countryside have lost their jobs in the cities. Many of these rural migrants worked in factories that sold products overseas and the problem is growing as China’s export markets evaporate. Chinese Premier Wen Jiabao had already warned that 2009 would be ‘the most difficult year for China’s economic development so far this century’. Economists said it would be extremely difficult for China’s economy to grow this year by 8.0 percent.
In South Korea, the government could not hide its shock at how quickly its economy was falling apart. “We have forecast a bleak economic outlook but things are getting worse faster than has been expected,” Vice Finance Minister Hur Kyung-Wook said. Year-on-year, the economy shrank 3.4 percent in the fourth quarter compared with 3.8 percent growth in the third. The annualised figure showed the biggest fall since the fourth quarter of 1998 when it contracted six percent. For 2008, South Korea’s economy grew 2.5 percent, sharply down from a five percent expansion in 2007.
The trade data out of Japan led analysts to predict that the economy there would suffer its worst performance since 1974 in the fourth quarter of 2008. “It’s inevitable that we will see a 10 percent or steeper drop,’ said Hiroshi Watanabe, an economist at Daiwa Institute of Research.