The Asian slump if anything, intensified yesterday.
South Korea’s exports tumbled by a record 32.8% last month, as a deepening slump in Asia’s export-driven economies continues to take hold.
And Chinese manufacturing activity contracted for a six month in a row. Australia’s edged higher, but remains in deep contraction.
It was the biggest drop in measured exports for South Korea since the country started compiling the figures in 1957, 52 years ago.
The fall was almost double December’s 17.9% drop, but not quite as bad as Japan’s 35% plunge in its December exports. But it was bad enough for Asia’s fourth largest economy.
Imports fell 32.1%, and the trade deficit was $2.97 billion in January. Japan had its third trade deficit in a row in December.
South Korea is sliding very quickly towards a very deep recession, just as Japan and Taiwan are.
The central bank has warned that the economy could remain recessed for all of 2009.
Japanese industrial production fell 9.6% in December, as did South Korea’s. Japan was off more than 30% for the year, South Korea 18.6%, Taiwan 32%.
The South Korean economy contracted in the closing months of the year, as did Singapore, Hong Kong and Taiwan.
Japan hasn’t reported its growth numbers yet, but its only a matter of by how far did activity fall in the quarter. Annualised, some estimates put the fall at well above 10%.
December’s was South Korea’s industrial output largest ever monthly drop, now its experienced an unwanted record drop in exports.
China’s GDP, which expanded by 13% in 2007, scarcely grew at all in the last quarter of 2008 on a seasonally adjusted basis. Singapore’s at 17% and South Korea’s at 21%.
It’s a terrible toll being exacted on what were up to midway through last year, still firing export machines.
It was a coincidence but an interview with the Financial Times in London saw Chinese leader (http://www.ft.com/cms/s/0/c3959018-f092-11dd-972c-0000779fd2ac.html) Wen Jibao reveal his country was looking at new stimulus ideas.
"China has pledged to take all necessary measures to stimulate its economy and fuel consumer spending, but has rejected as “ridiculous” suggestions that its huge pool of domestic savings has been partly to blame for the global financial crisis.
"In a rare interview, Wen Jiabao, China’s premier, said in London on Sunday that Beijing was considering fresh measures to boost its economy beyond its Rmb4,000bn ($585bn, €458bn, £404bn) fiscal package launched late last year.
"He told the Financial Times: “We may take further new, timely and decisive measures. All these measures have to be taken pre-emptively before an economic retreat.”
"Mr Wen said China’s economy had slowed sharply in the fourth quarter of 2008, with growth dipping to 6.8 per cent. He reeled off a list of measures – including massive infrastructure spending and handouts to consumers – which Beijing was taking to ensure economic growth reached “around 8 per cent” this year."
In a separate appearance at a state dinner in London, he had some upbeat news.
He said he saw signs of recovery in the final days of 2008 after growth in the world’s third largest economy slowed abruptly.
"During the last 10 days of December it started to get better. The goods piled up in port started to decrease and the price of industrial products started to rise," Wen told a business audience at a dinner during a visit to London, according to newsagency reports..
In South Korea, its biggest steel group and icon, Posco said it will extend production cuts for a third month this month.
That means less iron ore and coking coal from Australia (and bad news for Macarthur Coal in which Posco has a 20% stake, but which cut purchases late last year.
Japanese manufacturers, including NEC Corp. and Hitachi Ltd., announced at least 30,000 job cuts last Friday.
Panasonic is reported to be close to revealing huge losses tomorrow and Toyota an increased estimate for 2009 losses on top of the first figure of around $US1.7 billion.
South Korean companies in similar industries, such as cars, computer chips, heavy industrial plant, and technology are also suffering.
The country’s exports to China, the nation’s biggest overseas market, tumbled 32.2% during the first 20 days of January, shipments to the US fell 21.5% but they near collapsed to Europe, down a massive 46.9%. Sales to the Middle East fell 7.5%.
South Korea’s exports of semiconductors plunged 47% last month compared with January, 2008. Car shipments fell 55%, but exports of ships rose 20% as previously held contracts were finished.
Although there’s a backlog of ships on order, cancellations are rising as foreign buyers cutback as shipments of commodities such as oil and coal and general cargo decline.
South Korean shipyards are still working on orders they received in 2006 when prices rose by more than 20%. But South Korea’s 4th biggest shipbuilder Daewoo Shipbuilding has seen the slump accelerate.
Orders fell last year, the first fall in six years and apart from a Government order in September, it hasn’t had a new ship order at all. And the other big builders are felling the same pain.
The central bank cut key interest rate to a record low of 2.5% a month ago. The bank board meets on February 12.
In China, a survey of the country’s manufacturing sector showed it contracted for a sixth month in January.
The CLSA China Purchasing Managers’ Index rose to a seasonally adjusted 42.2 from 41.2 in December. As with
