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Great Recession in Asia

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Template:Great Recession sidebar While beginning in the United States the Great Recession spread to Asia rapidly and has affected much of the region.

East Asia

Mainland China

See also: Chinese property bubble

In China, the International Monetary Fund predicts GDP growth for 2008 will be 9.7% and drop to 8.5% in 2009.[1] A struggle was underway to see who would swallow the losses on US Agencies and Treasuries.[2] On November 9, 2008 China announced a package of capital spending plus income and consumption support measures. Four trillion yuan ($586 billion) will be spent on upgrading infrastructure, particularly roads, railways, airports and the power grid; on raising rural incomes via land reform; and on social welfare projects such as affordable housing and environmental protection.[3][4] So far at least 670,000 small and medium-size enterprises have been closed;[5] leaving mainly the large-size enterprises (which may or may not contain companies who have outsourced their workplaces away from the United States - leaving at least five million people there unemployed[6]).

Hong Kong

The Hong Kong economy officially slid into recession in the final quarter of 2008. The economy is predicted to grow at 2 percent in 2009. Hong Kong is an advanced tertiary economy built on services, retail, tourism, transport and financial industries. Hong Kong's manufacturing industry is located in Guangdong province which employs over 11 million people.[7] The Hang Seng Index has lost over 60 percent of its value, property market lost over 40 percent in value and unemployment is at a record high of 4.8 percent.[8]

Taiwan

Taiwan announced billions of dollars in spending and tax cuts due to declining growth and a 26 percent slump in the stock market in 2008.[9] The bankruptcy of Lehman Brothers raised concerns about global exposure to the assets and stock of Lehman Brothers and the potential for the bankruptcy to cause further tightening of credit. Taiwan, despite reporting few losses from the subprime mortgage crisis, was said to have Lehman-related exposure for its companies and retail investors totaling $2.5 billion. To increase purchasing power, the ROC government has issued the ROC consumer voucher.

Japan

See also: Lost Decade (Japan)

In Japan exports in June declined for the first time in about five years falling by 1.7 percent. Exports to the United States and European Union fell 15.4 percent and 11.2 percent respectively. The decline in exports and increase in imports cut Japan's trade surplus $1.28 billion a decline of 90 percent from the previous year. An economist at the Royal Bank of Scotland said the decline means the Japanese economy most likely declined in the second quarter.[10] Taro Aso, secretary-general of Japan's Liberal Democratic Party, said he believes Japan had entered a recession.[11]

Japan's economy declined by 0.6 percent in the second quarter of 2008.[12] This was later revised to a decline of 0.7 percent.[13] Japanese exports grew 0.3 percent in August 2008 compared to a year before down from 8 percent the previous month. Exports to the U.S. fell 21.8 percent, the biggest decline on record, and exports to Europe fell 3.5 percent.[14] Two Japanese banks appeared on the list of major Lehman creditors.[15] On November 17, the Japanese Economy Minister announced that the nation was officially in a recession.[16]

South Korea

By September 2008, the crisis threatening the GSEs (US mortgage lenders Fannie Mae and Freddie Mac) began to have consequences in Asia. The foreign exchange reserves of South Korea's central bank contained many depreciating "Agency bonds" from the GSEs, threatening a currency crisis and leading to depreciation of the South Korean won against the US dollar and other major currencies,.[17] Samsung Electronics has been reported to be posting a decrease in sales for the first time since the 1997 Asian financial crisis that home appliances saw a decrease in the domestic market of up to 20 percent since mid-June compared to the previous year. Domestic auto sales also saw a decrease in the second quarter. Auto exports also posted a loss and exports of home appliances were also reported to be in decline.[18]

South East Asia

Malaysia

In January 2009, Malaysia has banned the hiring of foreign workers in factories, stores and restaurants to protect its citizens from mass unemployment amid the global economic crisis.[19]

It was announced that some foreign companies would fire workforce in Malaysia. In 2009 GDP contracted 1.7%.[20]

Philippines

Unlike the other economies in the region, The Philippines was the only one of a mere handful of countries in the whole world to have recorded a positive economic growth in 2009 and averted the effects of economic recession.[21] However, it did not mean that the country experienced no effect of the ongoing world financial crisis. The economy was based on the remittances of the Overseas Filipino Workers, most of them working in affected countries like the United States.

Middle East

Gulf Co-operation Council

Booming and then Decreasing oil prices will affect Persian gulf countries.

United Arab Emirates

Real estate prices in Dubai have decreased substantially.[22]

Lebanon

Lebanon is one of the only seven countries in the world to have scored profits in 2008.[23] Given the regular security turmoil it has faced in the past, its banks have adopted a conservative approach. The strict regulations imposed by the central bank were crafted to make the Lebanese economy immune to political crisis; and so far, this has applied to the global economic crisis as well. The Lebanese banks remain, under the current circumstances, high on liquidity and reputed for their security.[24]

Moody's has recently shifted Lebanon's sovereign rankings from stable to positive acknowledging its financial security.[25] Moreover, with a Beirut stock market increase of 51%, the index provider MSCI, ranked Lebanon as the world's best performer in 2008.[23] Analysts are, nonetheless, skeptic about the future indirect effects of the crisis, but so far, the direct consequences have proved to be positive.

South Asia

Bangladesh

Bangladesh economy is not affected by the global recession. Bangladesh's economic growth and exports remain quite strong.[26]

India

India's economy benefited from recent high economic growth which declined greatly due to the global economic crisis.[27][28] Economic growth in India during FY2008-09 stood at 6.7%.[29] The global crisis had less impact of India because exports account for only 15% of India's GDP, less than half the levels of major Asian economic powers such as China and Japan.[30] However, unlike other major Asian economies, India's government finances were in poor shape and as a consequence, it was not able to enact large-scale economic stimulus packages.[31] Despite this, from June 2008 to June 2009, industrial production in India grew by 7.1%.[32]

Though he ended up being wrong, the former Indian Finance Minister P. Chidambaram once boasted that he expected India's economy to "bounce back" to 9% during FY2009.[33] India's Prime Minister Manmohan Singh said that the government will take measures to ensure that the economic growth bounces back to 9%.[34] The Asian Development Bank predicted India to recover from weakening momentum in 4-6 quarters.[35] At the G20 Summit, India called for coordinated global fiscal stimulus to mitigate the severity of the global credit crunch.[36] India said that it would inject US$4.5 billion into the financial system to help exporters.[37]

Some analysts pointed that India's growing trade with other Asian countries, especially China, will help reduce the negative impact of the crisis.[38] Analysts also said that India's high domestic demand and large infrastructure projects will act as a buffer reducing the impact of the global downturn on its economy.[39] Economists argued that India's financial system is relatively insulated and its banks do not have significant exposure to subprime mortgage.[40] In an editorial, the New York Times praised the strong regulations placed on the Indian banking system by the Reserve Bank of India.[41]

In May 2009, India reported an economic growth rate of 5.8%, beating most forecasts.[42] In second quarter of 2009 the Indian economy grew by 7.9% and gave indications that the Indian economy would scale a growth rate of 7% or above in 2009 and 8-9% in 2010. In the 3rd Quarter of 2010, the economy had bounced back with a growth rate of 8.8%.

Pakistan

In Pakistan the central bank's foreign currency reserves, when counting forward liabilities is said to only amount to as little as $3 billion, sufficient for a single month of imports. Corruption and mismanagement have combined with high oil prices to damage Pakistan's economy. Pakistan's rupee has lost more than 21 per cent of its value in 2008 and inflation is at 25 per cent. The government has failed to defer payments for Saudi oil or raise favorable loans. President Asif Ali Zardari claimed Pakistan needed a bailout worth $100 billion which he was expected to ask for at a meeting in Abu Dhabi in November. Ratings agency Standard and Poor's rates Pakistan's sovereign debt at CCC +, only a few ratings above the default level, warning the country may be unable to cover about $3 billion in upcoming debt payments.[43]

This led a change in economic managers,and politically elected finance minister Naveed Qamar was replaced by a financial advisor, Shaukat Tareen, a former banker belonging to Citigroup on October 8, 2008. The new finance advisor led the Pakistani delegation to IMF-World Bank meeting in USA with a hope to obtain a loan from the World Bank which has been stopped now due to reservations from IMF on World Bank for releasing this nature of Loan to any country. the situation in the Pakistan is seems to be revealed to progress. as in the budget for 2013-2014 taxes has been implemented to recover the income of the government through masses.

Sri Lanka

Sri Lanka too is affected with the global recession, as the demand for their major products such as garments, tea, rubber, coconut based products and agricultural products are at a downturn. At the moment, tea is severely affected and the country is experiencing 35% drop in the exports presently. Also, the tourist industry has downsized; last year, there was a 7% downsize to the industry, primarily due to the loss of European tourists.

Timeline of the Great Recession across all continents

Template:Timeline of the Great Recession

References

  1. ^ "Rapidly Weakening Prospects Call for New Policy Stimulus". IMF World Economic Outlook (WEO) Update. IMF. November 6, 2008. Retrieved 2009-01-04.
  2. ^ Keith Bradsher (September 4, 2008). "China’s Central Bank Is Short of Capital - NYTimes.com". Nytimes.com. Retrieved 2008-10-01.
  3. ^ Paul Maidment (2008-11-09). "China Announces Massive Stimulus Package". Forbes.com. Archived from the original on November 12, 2008. Retrieved 2008-11-11. {{cite news}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  4. ^ David Barboza (November 10, 2008). "China unveils $586 billion stimulus plan". International Herald Tribune. Retrieved 2008-11-10.
  5. ^ LABOUR-CHINA: Mass Unemployment Looms, ipsnews.net, January 9, 2009
  6. ^ The Hidden Cost of "Made in China": Tomorrow's American Jobs, Jeff Bocan, Huffington Post, October 6, 2011
  7. ^ Chan, John (21 November 2008). "Hong Kong enters recession". World Socialist Web Site. International Committee of the Fourth International. Retrieved 2009-01-04.
  8. ^ "The Economy - Hong Kong battles recession and speculators". BBC News. August 28, 1998. Retrieved 2009-01-04.
  9. ^ "New Zealand slashes rates as economy lurches toward recession". London: Daily Telegraph. 2008-09-11. Retrieved 2008-09-12.
  10. ^ "Japan exports shrink as global downturn hits Asia". Reuters. 2008-07-24. Retrieved 2008-07-25.
  11. ^ Fujioka, Chisa (2008-08-05). "Japan ruling party's Aso: Economy in a recession". Reuters. Retrieved 2008-08-10.
  12. ^ Aston, Heath (2008-08-13). "Japan heads towards recession as GDP shrinks". London: The Times. Retrieved 2008-08-17.
  13. ^ "Japan economy contracts by most in seven years". Agence France-Presse. 2008-09-12. Retrieved 2008-09-16.
  14. ^ "Japan's Export Growth Slows as U.S. Shipments Plunge". Bloomberg. 2008-09-25. Retrieved 2008-09-26.
  15. ^ Kaiser, Emily (2008-09-16). "Lehman fallout threatens deeper, wider recession". Reuters. Retrieved 2008-09-16.
  16. ^ "Japanese economy now in recession". BBC News. 2008-11-17. Retrieved 2010-01-05.
  17. ^ Leo Lewis in Seoul (2008-09-01). "South Korea heads for black September with won problems - Times Online". London: Business.timesonline.co.uk. Retrieved 2008-10-01.
  18. ^ "Autos, Electronics Face Slumps at Home and Abroad". The Chosun Ilbo. 2008-07-07. Archived from the original on April 22, 2009. Retrieved 2008-07-25. {{cite news}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  19. ^ Malaysia bans foreign labourers, Al Jazeera English, January 22, 2009
  20. ^ http://www.statistics.gov.my/portal/index.php?option=com_content&view=article&id=53%3Agross-domestic-product-gross-national-income-updated-18082010&catid=35%3Akey-statistics&Itemid=53&lang=en
  21. ^ IMF World Economic Outlook Database, April 2009. GDP-PPP figures of selected NIC countries for 2007 and 2008.
  22. ^ Palm Jumeirah prices drop 40%
  23. ^ a b Cooper, Kathryn (October 5, 2008). "Where on earth can you make a decent return?". London: The Sunday Times. Retrieved 2010-05-07.
  24. ^ "Lebanon 'immune' to financial crisis". BBC News. 5 December 2008. Retrieved 2010-01-05.
  25. ^ "Moody's changes outlook for Lebanon's sovereign ratings to positive from stable". Moody's. 11 December 2008.
  26. ^ "Dhaka wont need IMF support now".
  27. ^ "JPMorgan cuts India growth forecast, sees rate cuts". Reuters. 2008-11-17.
  28. ^ "India sees growth accelerating to 9 pct next year".
  29. ^ India economy grows by 6.7 pct in 2008-09, beats forecasts
  30. ^ Indian growth beats expectations, fuels recovery hopes
  31. ^ An astonishing rebound - Economist
  32. ^ India's June industrial output up 7.8 pct y/y
  33. ^ "India sees 9 pct growth next year".
  34. ^ Singh Targets 9% Growth for India
  35. ^ "'India is likely to recover in 4-6 quarters'".
  36. ^ Lawder, David (2008-11-15). "UPDATE 1-Indian adviser calls for coordinated fiscal stimulus". Reuters.
  37. ^ "India May Announce Package for Exporters, Nath Says (Update1)". Bloomberg. 2008-11-17.
  38. ^ Basu, Kaushik (2008-11-17). "China and India and world recession". BBC News. Retrieved 2010-01-05.
  39. ^ "India's New Roads May Buffer Economy From Recession (Update2)". Bloomberg. 2008-11-19.
  40. ^ "'India could benefit from global economic meltdown'".
  41. ^ Joe Nocera (2008-12-23). "Talking Business - Avoiding a Financial Collapse, Indian-Style". India: NYTimes.com. Retrieved 2009-01-04.
  42. ^ India economic growth beats forecasts
  43. ^ Wilkinson, Isambard (2008-09-16). "Pakistan facing bankruptcy". London: Daily Telegraph. Retrieved 2008-09-16.
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