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Asian Data Shows Severity of Slump
HONG KONG — As world leaders assembled in London for the Group of 20 summit meeting this week, the latest evidence of the severity of the economic crisis emerged from Asia on Wednesday, with business confidence in Japan plummeting to a record low, South Korean exports falling for a fifth consecutive month and a manufacturing index deteriorating in China.
The data from three of the largest Asian economies underscored a picture of slumping exports and production, and hammered home that despite some recent signs that the situation may have stopped deteriorating in parts of the world, the global economy remained in the middle of the worst downturn in decades.
The so-called Tankan survey in Japan — a closely watched quarterly poll by the Bank of Japan measuring sentiment among big manufacturers — plummeted to -58 in March from -24 in December, the lowest level since the survey began in 1974.
The reading, which was worse than economists had projected, came as the Japanese economy continued to shrink at a time of tumbling exports and weak domestic demand. Japanese exports, which make up about one-third of the overall economy, fell by nearly half in January and February, in part because the yen’s strength has made Japanese goods more expensive for consumers abroad.
South Korea has also had to grapple with falling exports, though the pace of decline there has been much less severe than in Japan. Fresh data Wednesday showed overseas shipments in March had fallen 21.2 percent from a year earlier. Imports slumped 36 percent.
In China, a purchasing managers index compiled by the brokerage C.L.S.A. slipped back in March, to 44.8, down from 45.1 in February, snapping a three-month streak of tentative improvement. It was the eighth month in a row that the reading had come in below 50, which is the dividing line between expansion and contraction.
The discouraging data follows downward revisions at several leading institutions’ growth forecasts for the year. On Tuesday, the Organization for Economic Cooperation and Development said it expected the economies of its 30 member states to contract 4.3 percent this year, rather than by the 0.4 percent it forecast last November.
“The global recession will worsen this year before a policy-induced recovery gradually builds momentum through 2010,” the O.E.C.D. said in its report.
The Asia-Pacific region was relatively well insulated from the financial turmoil that began in the United States in 2007. It began to be caught by the global downdraft only toward the end of last year — months after the United States and Europe — and many of the economies in the region, notably China’s and India’s, will still see significant, though slower, growth this year.
Still, the data Wednesday indicate that the global slump has months to run. Moreover, economists say that the labor market, already bad, is set to deteriorate as companies face intense pressure to scale back costs and output.
This, in turn, will put added pressure on government finances already strained by the stimulus and bailout packages that countries around the world have put in place.
Japan, in particular, is in severe straits, with economists projecting that the first quarter of the business year, which started Wednesday, showed yet another deep contraction. Prime Minister Taro Aso has pledged to compile an added stimulus package by mid-April, adding to two previous plans totaling ¥10 trillion, or $101 billion.
The Tankan survey results, Credit Suisse economists said in a note Wednesday, “confirm that the Japanese economy is facing an extremely difficult predicament, with many indicators hitting their worst levels on record.”
They also said forecasts for the quarter ahead suggested that corporate sentiment might not worsen, but it would be “quite some time” before any significant upturn came in the real economy, because corporate earnings kept deteriorating and production capacity and employment levels were considered “highly excessive.”
By contrast, recent data from South Korea has had a silver lining. Its export data showed Wednesday that the pace of decline had slowed from previous months. And factory output data for February, released Tuesday, showed an increase from a month earlier.
Stock markets in Asia took the bleak economic picture in stride. The Nikkei 225 index in Japan rallied nearly 3 percent and the Kospi in South Korea rose 2.25 percent. Stocks in mainland China rose 1.47 percent in Shanghai, and 1.87 percent in Shenzhen.
But the performance was mixed across the region, with the Hang Seng index in Hong Kong falling 0.42 percent. The Straits Times index in Singapore inched 0.33 percent higher, while the S&P/ASX 200 in Australia both edged 0.07 percent lower.
HONG KONG — As world leaders assembled in London for the Group of 20 summit meeting this week, the latest evidence of the severity of the economic crisis emerged from Asia on Wednesday, with business confidence in Japan plummeting to a record low, South Korean exports falling for a fifth consecutive month and a manufacturing index deteriorating in China.
The data from three of the largest Asian economies underscored a picture of slumping exports and production, and hammered home that despite some recent signs that the situation may have stopped deteriorating in parts of the world, the global economy remained in the middle of the worst downturn in decades.
The so-called Tankan survey in Japan — a closely watched quarterly poll by the Bank of Japan measuring sentiment among big manufacturers — plummeted to -58 in March from -24 in December, the lowest level since the survey began in 1974.
The reading, which was worse than economists had projected, came as the Japanese economy continued to shrink at a time of tumbling exports and weak domestic demand. Japanese exports, which make up about one-third of the overall economy, fell by nearly half in January and February, in part because the yen’s strength has made Japanese goods more expensive for consumers abroad.
South Korea has also had to grapple with falling exports, though the pace of decline there has been much less severe than in Japan. Fresh data Wednesday showed overseas shipments in March had fallen 21.2 percent from a year earlier. Imports slumped 36 percent.
In China, a purchasing managers index compiled by the brokerage C.L.S.A. slipped back in March, to 44.8, down from 45.1 in February, snapping a three-month streak of tentative improvement. It was the eighth month in a row that the reading had come in below 50, which is the dividing line between expansion and contraction.
The discouraging data follows downward revisions at several leading institutions’ growth forecasts for the year. On Tuesday, the Organization for Economic Cooperation and Development said it expected the economies of its 30 member states to contract 4.3 percent this year, rather than by the 0.4 percent it forecast last November.
“The global recession will worsen this year before a policy-induced recovery gradually builds momentum through 2010,” the O.E.C.D. said in its report.
The Asia-Pacific region was relatively well insulated from the financial turmoil that began in the United States in 2007. It began to be caught by the global downdraft only toward the end of last year — months after the United States and Europe — and many of the economies in the region, notably China’s and India’s, will still see significant, though slower, growth this year.
Still, the data Wednesday indicate that the global slump has months to run. Moreover, economists say that the labor market, already bad, is set to deteriorate as companies face intense pressure to scale back costs and output.
This, in turn, will put added pressure on government finances already strained by the stimulus and bailout packages that countries around the world have put in place.
Japan, in particular, is in severe straits, with economists projecting that the first quarter of the business year, which started Wednesday, showed yet another deep contraction. Prime Minister Taro Aso has pledged to compile an added stimulus package by mid-April, adding to two previous plans totaling ¥10 trillion, or $101 billion.
The Tankan survey results, Credit Suisse economists said in a note Wednesday, “confirm that the Japanese economy is facing an extremely difficult predicament, with many indicators hitting their worst levels on record.”
They also said forecasts for the quarter ahead suggested that corporate sentiment might not worsen, but it would be “quite some time” before any significant upturn came in the real economy, because corporate earnings kept deteriorating and production capacity and employment levels were considered “highly excessive.”
By contrast, recent data from South Korea has had a silver lining. Its export data showed Wednesday that the pace of decline had slowed from previous months. And factory output data for February, released Tuesday, showed an increase from a month earlier.
Stock markets in Asia took the bleak economic picture in stride. The Nikkei 225 index in Japan rallied nearly 3 percent and the Kospi in South Korea rose 2.25 percent. Stocks in mainland China rose 1.47 percent in Shanghai, and 1.87 percent in Shenzhen.
But the performance was mixed across the region, with the Hang Seng index in Hong Kong falling 0.42 percent. The Straits Times index in Singapore inched 0.33 percent higher, while the S&P/ASX 200 in Australia both edged 0.07 percent lower.
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