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In Asia, Hints of a Distant and Fragile Recovery



June 10, 2009 – Comments (0)

The NYT published an interesting article on the status of the economic recovery in Asia this morning. As has been widely noted in the media, the global economy has stopped its free fall, but recent data from Asia indicates that a major recovery and a return to growth may not happen for a while and once it does arrive growth will be weaker than we have become accustomed to.

A few of the pieces of data that the article focused on include:

- Orders for machinery in Japan fell 5.4% in April, more than analysts expected.

- Factory output in Malaysia fell 11.4% year-over-year in April. While this is the eighth consecutive monthly drop, the pace of the decline has slowed.

- Exports from the Philippines dropped 35.2% year-over-year and 3.6% versus the prior month in April.

- South Korea and Taiwan recently reported similar disappointing export numbers for May.

Interestingly, the unemployment rate in South Korea rose to a four-year high...but it is only at 3.9%. People in the U.S. would give anything to have a rate that's even twice that right now.

- Resource rich Australia's economy on the other hand has been supported by the recent rally in commodities. Consumer confidence there jumped by the most in 22 years in June.

On the bright side, most of the aforementioned data is a little old and it has likely improved over the past month plus. Similarly, many Asian countries are free of the excessive level of debt that the United States has on both the government and consumer level. Still, without a rapid recovery in the world's largest consumer, the U.S., Asian countries...particularly China...are going to have to do a better job at stimulating domestic demand to experience anything like the rate of growth that they had become accustomed to before the current recession.

In Asia, Hints of a Distant and Fragile Recovery


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