Asia economy: Looking grim

Asia economy: Looking grim
By Economist.com
From The Economist
Published: December 15, 2008

The Economist Intelligence Unit has made further significant reductions to growth forecasts for Asia and Australasia next year. In November, we expected the economies of Japan and Singapore to contract in 2009. We have now added Hong Kong, South Korea, New Zealand and Taiwan to that list.

The worsening global picture merits some relatively dramatic re-evaluations. Our GDP forecasts for export-dependent South Korea and Taiwan have been slashed by 3.3 and 4.2 percentage points, respectively. These two economies, along with Japan and Singapore, will be the worst performers in the region in 2009. But even superstars like China and India are facing sharp slowdowns—albeit to still-robust rates of 7% and 5.7% respectively.

Following is a round-up of our revised forecasts for Asia's three biggest economies, and for Singapore, South Korea and Taiwan—the three economies for which we have cut our forecasts by the biggest margins:

The big three

China: China's economic data make for increasingly depressing reading. The global crisis is taking a big toll on the export sector; export revenues fell year on year in November for the first time in more than seven years, while import spending dropped even more markedly. But that is only part of the story. The other engine of China's economy is sputtering too. Domestic demand is faltering amid a property-sector slowdown that has cut investment growth and hit output of steel and cement. Accordingly, we have cut our forecast by another 0.5 percentage points and now expect the economy to grow by 7% in 2009, down from 9%-plus in 2008. To be sure, higher government spending and policies aimed at resuscitating the property market will limit the damage. But the downside risks to our forecast—which include an even-weaker global outlook, a collapse in consumer confidence, and a longer lag period as exports and property recover—continue to outweigh upside risks.

India: India also set an unenviable record in November, recording its steepest decline in export growth in over a decade. Moreover, the global trade slowdown is feeding through even to India's domestically oriented economy. As domestic and foreign investors seek to deleverage and to reduce their risk exposure, financing for investment and consumption is drying up. Initially restricted to the industrial sector, the slowdown is spreading to the services sector as the squeeze on costs becomes more pervasive and demand slackens. We have therefore lowered our forecast for GDP growth in fiscal 2009/10 (April-March), from 6.1% to 5.7%. Moreover, the risks are on the downside. India's budget and external deficits put the government in a weak position to implement supplementary fiscal measures if the global downturn proves even more severe.

Japan: Japan was supposed to weather the global crisis better than other developed countries. Instead, it is facing a severe recession. External conditions for Japanese exporters are bleak, with markets in the US and EU in the doldrums. Meanwhile, the squeeze on profit margins and the liquidity crunch are causing Japanese companies to cut back on capital investment. Machinery orders, a key forward indicator of economic activity, are nose-diving at an unprecedented rate. At the same time, declining real wages and rising unemployment will hit Japanese consumer spending. We expect Japan's GDP to contract by 1.7% in 2009 (compared with our previous forecast of -0.5%).

Poor performers

Taiwan： We have slashed out forecast for Taiwan by 4.2 percentage points—more than for any other country in Asia. We now expect the economy to contract by 2.9% in 2009—making it the worst performer in the region. This gloomy picture is a consequence of the island economy's vulnerability to the global slowdown. Exports of goods and services, which account for around 76% of GDP, are already in decline. Moreover, a collapse in fixed investment—much of which is export-oriented—highlights the fact that many manufacturers are scaling back their plans in anticipation of even weaker demand next year. Consumers, meanwhile, are in no position to pick up the slack. This reflects a variety of factors, including plunging share prices and anxiety over job security. Taiwan's unemployment rate has already hit a three-year high. By some measures, consumer confidence has dropped to the lowest level on record. The government's stimulus measures are unlikely to have a big impact.

South Korea

We have sharply downgraded our forecast for South Korea's economic performance; we now expect GDP to contract by 1.7% (compared with a growth forecast of 1.6% previously) in 2009. This largely reflects our increasingly pessimistic assessment of global growth prospects, given that the deteriorating financial and economic environment abroad will have a negative impact on all components of South Korean GDP. In recent years the main engine of economic growth has been exports, but shipments of goods and services are set to contract by more than 5% next year. Private consumption will shrink as the unemployment rate rises, putting downward pressure on wages. Economic uncertainty will also undermine consumer confidence more broadly, while problems in the local financial system will limit the availability of consumer credit. Companies, too, will find it harder to obtain financing, and so they will cut back their investment plans as sales slow. The government is making increasingly aggressive use of fiscal and monetary policy to stimulate the economy. So far, though, this has done little to boost confidence in either the won or domestic assets in general.

Singapore: Singapore's open economy is being battered by the global crisis. We are now expecting the city-state's GDP to contract by 2.2% in 2009, following estimated growth of just 2.2% in 2008. Exports are set to contract as demand in the US and most of Singapore's other important markets stagnates. The prospects for Singapore's crucial technology sector—which depends on electronics exports—are looking particularly poor. But it is not only the external economy that will be troubled in 2009. We also expect growth in private consumption, which accounts for about two-fifths of economic activity, to weaken, primarily because of the deteriorating labour market and tight credit conditions. To be sure, the government will spend vigorously to prop up domestic demand. A spike in government consumption should help to offset a drop in private-sector investment. But policymakers in Singapore, as elsewhere in Asia, face a severe test of their capacity to avert a deep and prolonged recession.

Still coupled

After this litany of bad economic news, it's worth reiterating that emerging Asia will still be the world's best-performing region next year. But there is no way of escaping the fact that growth will be disappointingly sluggish in comparison to the blistering rates recorded at the peak of the recent boom. The main reason for this, of course, is that Asia is highly exposed to the global trade cycle—and, in particular, to the economic prospects of the developed world. The current crisis has thoroughly debunked the once-common notion of "decoupling"—the idea that Asia had become a growth engine in its own right and would keep powering ahead if the US and Europe stalled. Asia's economic prospects are still tied to those of the developed markets, and it will be at least another year before they start to look brighter.

台灣明年GDP負 2.9%，亞洲最差
作者：經濟學人 　
出處：Web Only 2008/12
相關關鍵字：經濟學人
摘要：
《經濟學人》大幅調降亞洲和澳大拉西亞 2009年的成長預測，原本預測，僅有日本和新加坡面臨
經濟衰退，現在連香港、南韓、紐西蘭和台灣也出現在衰退名單中。

日本，失業率上升衝擊消費

日本面臨嚴重衰退，歐美經濟不佳影響出口業；毛利率和流動性下滑，迫使日本企業減少投資。此外，實質薪資下滑，加上失業率上升，衝擊消費，預測明年經濟將衰退 1.7%。

台灣，恐為亞洲表現最差經濟體

台灣出口業受到重創，固定投資也隨之崩潰，消費者無法填補缺口。台灣失業率已創下三年新高，消費者信心跌至谷低，政府刺激計畫也難有成效。預測明年經濟將衰退 2.9%，預期下修幅度最高。

南韓，政府措施無法帶動企業信心

全球經濟衰弱和金融問題，將對南韓經濟造成全面性影響。出口受到重創，失業率上升抑制私人消費，經濟不確定性造成信心下滑，企業難以取得融資。南韓政府採取許多強力手段，但目前增加信心效果不大，預測明年經濟將衰退 1.7%。

新加坡，財政能力面臨重大挑戰

除了出口大受衝擊外，勞動市場惡化和信貸緊縮，也會影響私人消費。政府勢必大幅增加支出，維持國內需求，抵消私人投資的缺口，預測明年經濟衰退 2.2%。

雖然壞消息不斷，新興亞洲仍是明年表現最好地區。不過，和過去幾年相比，成長率會大幅下滑，主因在於亞洲對全球貿易依賴極高。亞洲經濟仍與已發展市場有緊密關係，而已發展市場最快也將在一年後才復甦！（黃維德譯）