Meanwhile there was good news from Singapore and South Korea yesterday and that can be put down to China’s recovery.
The Singapore government upgraded its second quarter growth estimate yesterday and South Korea’s Central Bank left interest rates steady on 2%.
Singapore’s GDP rose an annual 20.7% in the June quarter, after shrinking a revised 12.2% in the three months to March, according to a statement from the country’s Trade Ministry.
And compared with the June quarter of 2008, the economy was down a revised 3.5%.
Singapore raised its 2009 economic forecast on July 14 after the manufacturing industry posted its best performance in five quarters in the three months to June. The government expects the economy to shrink between 4% and 6% this year, compared with a contraction of as much as 9% predicted earlier.
Over the six month to June it contracted 6.5%, which was better than expected nearly a month ago.
It is still “too early to celebrate” Lee said last week. “The outlook remains clouded. The advanced economies are not expected to bounce back soon.”
Manufacturing, which accounts for a quarter of the economy, fell a revised 2.4% from the June quarter of 2008, after the terrible 24.1% slump in the three months ended March.
"Manufacturing output increased by 49.5 per cent, compared to the previous quarter’s contraction of 18.5 per cent," the Ministry said in the statement.
"This was largely due to a surge in the production of active pharmaceutical ingredients in the biomedical manufacturing cluster and an increase in inventory restocking in the electronics sector.
"Momentum in the construction sector also picked up strongly after a moderation in the first quarter.
"The sector grew by 32.7 per cent compared to the first quarter, driven by the growth in both public and private construction activities.
"Financial services also improved in the second quarter, growing by 22.8 per cent compared to the first quarter.
"This performance provided a lift to the services producing industries as a whole, which grew by 8.7 per cent compared to the 9.8 per cent decline in the previous quarter.
"Except for the hotels and restaurants sector, the other services producing industries saw modest gains compared to the previous quarter," it added.
And, South Korea’s central bank kept its key rate steady for six months in a row yesterday as the economy continues to recovery slowly from the sharp slump.
The Bank of Korea cut its benchmark rate by 3.25% between October and February (similar to the way our Reserve Bank slashed rates 4.25%).
The IMF has upgraded its forecasts earlier this week for South Korea’s economic growth in 2009, citing low interest rates and fiscal spending.
With China, Singapore and Australia, the South Korean economy is outpacing other economies in the region and in North America and Europe.
The government says industrial production had its strongest rise in four months in June, and business confidence hit a 14 year high for the manufacturing sector.
The Bank of Korea last month raised its gross domestic product forecast for this year and next, saying the economy will shrink a less-than-expected 1.6% in 2009, before growing 3.6% in 2010.
