03-01-2009

Asian Exports Tumble, Deepening Slowdown Amid Global Recession

Sandra Fickweil
03-01-2009
01:07

This article talks about Asian economies and their effects of the recession.
In whole Asia economies are tumbling: In India and South Korea overseas sales decrease drastically, Indonesia’s export shipments fell by 35% in January.
The problem is on the one hand that the economies are getting worse, as well as shrinking economies deter foreign investment. This situation puts pressure on Asian governments, being twice as reliant on exports as the rest of the world, to add to interest-rate and tax cuts to revive growth.
According to Sherman Chan, an economist at Moody's Economy.com in Sydney, “most Asian economies are on track to record an annual contraction in 2009”.
This economic disaster affects also the Asian currencies: the rupee was at 51.69 per dollar in January and fell to 51.15 on February, the won dropped by 2.3 percent, and the Indonesia's rupiah declined 1.9 percent.

Due to the recessions in the U.S. and Europe, Asia’s biggest market, Japan’s and China’s exports are also decreasing. According to the World Bank, international trade shrinks in 2009 for the first time in more than 25 years as economic expansion slows and commodity prices slide. The volume of the world trade is supposed to contract this year by 2.1 percent.
In order to prevent the global slowdown, Asian government unveiled fiscal stimulus packages worth almost $700 billion.

A lot of job losses still take place: In India, Honda Motor Co. and Hyundai Motor Co. fired many workers. The Indian Prime Minister has announced cheaper credit, tax refunds and eased trade rules to help exporters maintain profits and minimize job losses. He has announced three stimulus packages since December including tax cuts on consumer products, services, and higher spending on roads, ports and utilities.
In South Korea, the government allocated 51 trillion won (which is $33.6 billion) in tax cuts and spending and they plan a further budget package that will be unveiled soon. The benchmark interest rate was reduced by the central bank reduced.

After reading this article, we also get an insight how economy and trade looks like in the Asian markets. Recession in Europe and America has its impacts everywhere and I was really surprised that even the South Korean economy feels the impact of the world wide recession. I am not sure if it is really the right way to spend tons of government money—it has already been done couples of times in the US and we still do not notice any improvements or upswing in economy. Debts are getting bigger and the peoples have to pay more and more—as they are the ones who finance all economic stimulus spend by government.