Business conditions in the huge Japanese and Germany economies have worsened, calling into question suggestions the global recession might start easing later this year.
As well, the Chinese leadership have made a call to arms at a powerful Party Conference in Beijing, in an indication that China’s growth is stuttering.
The fall in Japanese exports was across the board: shipments to Asia, China, the US and Europe were all lower in what’s a solid sign of just widespread the slump is for one of the world’s export powerhouses.
Germany is another export powerhouse and business conditions there are worse than expected.
In fact, Germany and its fellow European economies seem to be struggling with industrial orders falling sharply in December.
The German banking system has emerged as the most stricken after America’s and this starting to worry authorities from around the world, especially in Europe where the slumping economies in Central and Eastern Europe are in debt to European banks to the tune of hundreds of billions of dollars.
US Fed chairman, Ben Bernanke said yesterday that the deep US recession may slow later in the year, all things being equal, but that depended on government stimulus packages working and some improvement in other economies.
US exports had been hurt by the slump in the global economy and wouldn’t resume any growth until the rest of the world started growing.
Likewise, the US economy has to start growing to help the rest of the world steady and then start growing.
Judging by figures and events in the next two largest economies in the world, Japan and Germany, a boost for US exports is not in prospect soon; and both are suffering from the slump in America and the rest of the world.
Japanese exports in January fell nearly 46%, the biggest fall since 1980 (when the current method of tracking exports was started) and German business confidence plunged to an 18 year low, with no positive news anywhere in the measure and eurozone industrial output fell in December to be down massively from the same month of 2007.
Exports to China fell 45.1% and those to Asia dropped 46.7%, not as bad as the 50%-plus slump in shipments to the US, but a sign nevertheless that Asia and China are not travelling well.
The Japanese Finance Ministry said seasonally adjusted, Japanese exports also fell 10% from December and the country recorded a bigger trade deficit for the month, of $US9.9 billion at current exchange rates, 70% higher than that recorded in December.
Japanese exports to the US and Europe dropped by record amounts. Shipments to the US plunged by almost 53%, from the same month in 2008, while those to Europe fell 47.4%.
There is a small glimmer of relief for Japanese exporters: the yen has fallen by 6% against the US dollar so far this month.
That will relieve some of the huge pressures on exporters like car companies, computer equipment makers, steel groups and others who have found returns from falling sales falling even faster because of the high value of the yen.
Analysts expect Japan tomorrow to report a record 10% in industrial output for January from December.
Unemployment is also forecast to rise sharply from the 4.4% in December as corporate icons such as Sony and Toyota, NEC, Panasonic, Hitachi and hundreds of other companies slash thousands of jobs.
Media reports said President Hu Jintao warned yesterday of a worsening economic situation in China and called for more "powerful” measures to reverse the tide.
Western newsagencies reported Mr Hu as saying "The world economic situation is austere and complicated, the global financial crisis had yet to level out and China’s economic growth is under pressure of a slowdown,” Mr Hu said.
In a speech to the ruling Communist Party’s 25-member Politburo, Mr Hu called for "more powerful and efficient measures to increase domestic demand, and consumer demand in particular”, according to a report by Xinhua news agency.
"The government should maintain the policy of giving top priority to increasing domestic demand while stabilising external demand.”
The party has signalled recently it intends to take measures during the National People’s Congress session, beginning next week (on March 5), to cushion the blow from the slowest economic growth in nearly 20 years.
China’s growth slowed to 6.8% in the final quarter of last year, sharply down from the double-digit expansion of most of the past decade. It’s been rumoured that the commitment to 8% growth this year might be allowed to ‘slip’ at next week’s Congress because of the slump.
Across the 16-country eurozone,
industrial orders fell sharply by 5.2% in December compared with November.
Eurostat, the European Union’s statistical office, said that compared with the December a year before, they were down 22.3%. German industrial orders fell a nasty 9% in December but Ireland saw its orders plunge by more than 12% from November.
In the 27 countries of the EC (known as EU27) new orders declined by 6.4% in December 2008, after dropping by 5.1% in November. In December 2008 compared with December 2007, industrial new orders decreased by 22.3% in the euro area and by 23.3% in the EU27".
German business
