Asia’s major economies reported a slew of gloomy news yesterday showing the global crisis was hitting harder, as export-dependent nations felt the pinch from the worldwide slowdown.
China’s economy slowed sharply in the final quarter of last year to just 6.8 percent as thousands of factories that sold to overseas markets shut, pulling the full-year growth figure down to 9 percent, the National Bureau of Statistics said.
Japan warned it was facing a two-year recession and announced new measures to repair battered credit markets, after announcing a 35 percent plunge in exports last month as consumers worldwide tightened their belts even more.
South Korea, meanwhile, said its 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.
The three include the two 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,” Oster said.
Many of the region’s national economies were “trade-exposed” and faced growing problems as global fortunes declined, he said.
“We broadly see the global economy as going into a period where 2009 looks like it’s going to be the worst year since World War II,” he said.
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.
In China, as many as 6 million people from the countryside have lost their jobs in the cities because of the economic crisis, the National Bureau of Statistics said as it released key data for last year.
“The international financial crisis is deepening and spreading with a continuing negative impact on the domestic economy,” said Ma Jiantang (馬建堂), the head of the statistics bureau.
Economists said the latest data showed it would be extremely difficult for China’s economy to grow this year by 8 percent, a rate considered by many to be a minimum to maintain employment at a level that ensures social stability.
In another sign of the precipitous decline of activity, the consumer price index, the main gauge of inflation, slowed to 1.2 percent last month, the statistics bureau said.
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,” South Korean Vice Finance Minister Hur Kyung-wook told reporters.
Year-on-year, the economy shrank 3.4 percent in the fourth quarter compared with 3.8 percent growth in the third. The annualized figure showed the biggest fall since the fourth quarter of 1998, when it contracted 6 percent.
For the whole of last year, South Korea’s economy grew 2.5 percent, sharply down from a 5 percent expansion in 2007, the central bank said.
Seoul’s official forecast for this year is 2 percent growth, but a senior bank official admitted this was probably overly optimistic.
“All economic data of late show Korea’s economic activity is rapidly deteriorating amid the global recession,” Choi Chun-sin told a press conference. “The chances are very high that Korea’s economic growth will be much worse than our forecast.”
Some think tanks and investment banks forecast outright recession.
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 last year.
“It’s inevitable that we will see a 10 percent or steeper drop,” said Hiroshi Watanabe, an economist at Daiwa Institute of Research.
Downgrading its earlier outlook, the Bank of Japan said the world’s second-biggest economy was expected to contract by 1.8 percent in the financial year to March and by 2 percent the following year.
The bank left its key interest rate unchanged at 0.1 percent, as expected, while announcing fresh steps aimed at unblocking credit flows.
The bank said it would spend up to ¥3 trillion (US$33.7 billion) to buy commercial paper, a type of short-term corporate debt, to make it easier for companies to secure vital credit during the recession.
“Exports have been decreasing substantially, reflecting a slowdown in overseas economies, and domestic demand has become weaker against the background of declining corporate profits and the worsening employment and income situation in the household sector,” the central bank said. “Financial conditions have become tighter.”
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