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Asia

Sluggish Growth for Asia in 2009

The impact of the current global economic downturn can be felt across Asia. The stock markets across the continent have been continuously volatile and growth is rapidly slowing down. Investors are scared to return to the market and analysts are not too optimistic about the year to come.

Japan's economy shrank 1.8% in third quarter

Japan's economy shrank 1.8% in third quarter

The last three months for Asian economies were not less than a nightmare. The turmoil in the US and European markets have had a massive impact on the stock markets across Asia, especially on economies, driven largely by exports.

The overall growth has slowed down dramatically in 2008, leaving policy makers, analysts, industrialists puzzled on what to do.

Recent figures suggest Japan’s economy, the second largest in the world, has already slipped into recession. On the other hand, China, which until recently was enjoying double-digit growth, is expected to register its weakest growth in nearly two decades by the end of this year. And as Tim Condon, head of research at ING Financial Markets in Singapore says these are not the only ones showing negative trend.

“Singapore and Hong Kong are bearing the brunt of this downturn. Both economies are experiencing negative growth. Singapore is already in recession. Beyond that Taiwan has experienced negative growth in the third quarter of the year and there are signs that it will also have negative growth in the fourth quarter,” said Condon.

Stimulus packages unveiled

The governments across Asia have cut interest rates and introduced a number of stimulus packages to boost their domestic demands and financial systems and bolster investor’s confidence.

China, for example unveiled last month a package of more than 460 billion euros, mostly earmarked for infrastructure and social projects. Condon is optimistic about the measures but has some doubts too.

“At this point people are so shocked by the downturn that they have lost the sight of the potential fruits these policy packages can deliver for growth. I think it will take time to mobilise these stimulus packages. They will bear fruit but will take some time”.

Meanwhile efforts are also underway at multilateral level, with governments in the region joining hands to ward off slowdown.

On Tuesday the members of Association of Southeast Asian Nations (ASEAN) signed trade agreements in Singapore to encourage investment and reduce tariffs. The 10 member bloc also aims to create an integrated market for the region by 2015.

Co-ordinated efforts to tackle slump

Forgetting their decades old differences, China, Japan and South Korea held a trilateral meeting at the weekend and agreed to co-ordinate their efforts to deal with the ongoing financial crisis.

But despite these efforts, experts predict a slow growth in Asia in the months to come. Tim Condon of the ING Financial Markets again:

“It will continue to slowdown in the first part of the year. And then can bounce back as and when the global economy will stabilise and as the stimulus packages will begin to bear some fruits."

Experts, though, seem to remain divided on when exactly the global economy will begin to stabilise. Some expect to see signs of recovery by the end of next year, while others predict a revival not before 2011.

  • Date 16.12.2008
  • Author Disha Uppal 16/12/08
  • Print Print this page
  • Permalink http://p.dw.com/p/LsKG
  • Date 16.12.2008
  • Author Disha Uppal 16/12/08
  • Print Print this page
  • Permalink http://p.dw.com/p/LsKG