Asia’s economies will grow at a slower-than-expected pace this year and next as demand from the US, Europe and Japan weakens and turmoil in global financial markets deepens, Merrill Lynch & Co said.
The region will expand 7.7 percent this year, from an earlier forecast of 7.9 percent, said Merrill analysts in Hong Kong led by Asia-Pacific chief economist T.J. Bond. Growth will ease to 7.3 percent next year, lower than a previous prediction of 7.9 percent, the report published on Thursday said.
“The backdrop for global demand has deteriorated,” the economists wrote. “Asian exports to the US have already slowed significantly and will probably drop into negative territory. The deterioration in Europe and Japan is the unpleasant new surprise.”
Japan’s economy shrank 3 percent last quarter, the steepest decline since 2001, while the euro-area economy contracted 0.2 percent in the same period.
Manufacturing orders in Germany, Europe’s largest economy, fell for an unprecedented eighth straight month in July and Europe’s manufacturing and service industries contracted for a third month last month.
Asia’s “growth should remain well above recession levels,” the Merrill report said.
“However, we now expect it to drop below trend,” the report said.
Goldman Sachs Group Inc last month estimated that half of the world economy already faced the threat of recession, with richer nations faring the worst as emerging markets continue to expand.
The global economy faces a 25 percent chance of recession in the next year, UBS AG economists said.
The US Treasury Department and the Federal Housing Finance Agency last weekend seized control of Fannie Mae and Freddie Mac after the biggest surge in mortgage defaults in at least three decades threatened to topple the companies, which make up almost half the US home-loan market.
Financial institutions worldwide have reported US$510 billion in losses and writedowns since the beginning of last year and the credit market collapse erased US$9 trillion from global stocks in the past year.
“The weakness in financial markets has reached levels where it could affect the real economy,” the Merrill report said.
“The main channel is through the exchange rate: a sharp currency depreciation can feed through rapidly into inflation. Higher interest rates in response tend to slow domestic consumption and investment,” it said.
The US dollar this quarter has strengthened against nine out of 10 Asian currencies tracked by Bloomberg.
China’s economy will expand 10 percent this year, Merrill predicted, cutting its earlier forecast of 10.4 percent.
Growth will be 9.2 percent next year, the economists said, a percentage point less than previously expected.
“We expect China’s potential growth rate to slow towards 9 percent for the next three years, gradually declining towards 8 percent by 2013,” the economists said.
“Domestic consumption and investment, instead of exports, will help sustain China’s growth and smooth volatility due to the global slowdown and the real-estate cycle,” they said.
RESILIENCE: Deepening bilateral cooperation would extend the peace sustained over the 45 years since the Taiwan Relations Act, Greene said Taiwan-US relations are built on deep economic ties and shared values, American Institute in Taiwan (AIT) Director Raymond Greene said yesterday, adding that strengthening supply chain security in critical industries, enhancing societal resilience through cooperation and deepening partnerships are key to ensuring peace and stability for Taiwan in the years ahead. Greene made the remarks at the National Security Youth Forum, organized by National Taiwan University’s National Security and Strategy Studies Institution in Taipei. In his address in Mandarin Chinese, Greene said the Taiwan-US relationship is built on deep economic ties and shared interests, and grows stronger through the enduring friendship between
GAINING STEAM: The scheme initially failed to gather much attention, with only 188 cards issued in its first year, but gained popularity amid the COVID-19 pandemic Applications for the Employment Gold Card have increased in the past few years, with the card having been issued to a total of 13,191 people from 101 countries since its introduction in 2018, the National Development Council (NDC) said yesterday. Those who have received the card have included celebrities, such as former NBA star Dwight Howard and Australian-South Korean cheerleader Dahye Lee, the NDC said. The four-in-one Employment Gold Card combines a work permit, resident visa, Alien Resident Certificate (ARC) and re-entry permit. It was first introduced in February 2018 through the Act Governing Recruitment and Employment of Foreign Professionals (外國專業人才延攬及雇用法),
The Ministry of Transportation and Communications yesterday said that it would redesign the written portion of the driver’s license exam to make it more rigorous. “We hope that the exam can assess drivers’ understanding of traffic rules, particularly those who take the driver’s license test for the first time. In the past, drivers only needed to cram a book of test questions to pass the written exam,” Minister of Transportation and Communications Chen Shih-kai (陳世凱) told a news conference at the Taoyuan Motor Vehicle Office. “In the future, they would not be able to pass the test unless they study traffic regulations
‘COMING MENACINGLY’: The CDC advised wearing a mask when visiting hospitals or long-term care centers, on public transportation and in crowded indoor venues Hospital visits for COVID-19 last week increased by 113 percent to 41,402, the Centers for Disease Control (CDC) said yesterday, as it encouraged people to wear a mask in three public settings to prevent infection. CDC Epidemic Intelligence Center Deputy Director Lee Chia-lin (李佳琳) said weekly hospital visits for COVID-19 have been increasing for seven consecutive weeks, and 102 severe COVID-19 cases and 19 deaths were confirmed last week, both the highest weekly numbers this year. CDC physician Lee Tsung-han (李宗翰) said the youngest person hospitalized due to the disease this year was reported last week, a one-month-old baby, who does not
RSS