The global slowdown spreads, but how far?
We’ve been waiting for the numbers from India and China to confirm the extent of the obvious global slowdown that is being somewhat masked by the confusing, and almost certainly temporary, counter-trend in oil and commodities. We’re still waiting for China and India’s statistics, but here are Japan’s, and things don’t look too good. WSJ:
Japan’s trade surplus tumbled last month as exports fell for the first time in nearly five years, a sign of declining consumer demand in many countries…”It now seems that exports may have also peaked and entered a decreasing trend,” said Takeshi Minami, chief economist at Norinchukin Research Institute. The Japanese economy “will unavoidably face harsh conditions ahead,” he said. Japan’s goods-trade surplus fell 89% last month from a year earlier to 138.6 billion yen ($1.28 billion), marking the fourth consecutive monthly decline…
Exports fell 1.7% from a year earlier, slipping for the first time since November 2003. Shipments to the U.S. and Europe dropped sharply, 15% and 11%, respectively…Japan’s exports to the rest of Asia rose 1.5%, compared with a 16% rise a year earlier. China-bound shipments increased 5.1%, down from a 23% increase a year earlier.
Despite the impressive infrastructure spending in the emerging economies, we very much doubt that China will escape unscathed from this slowdown or recession, and that the results could get pretty bad. Maybe we’re wrong, and the enormous growth in trade among the BRIC nations and other developing countries will offset the declines in final demand from the developed world, but we think that scenario is still a couple of business cycles away. After all, China is still a very poor country with large regional areas of significant affluence. The extent to which China’s economy is self-sustaining, in the absence of (previously crucial) strong export growth, is unknown at this time. In any event, we’re likely to know how this all plays out pretty soon.