U.S. Economic Slowdown – Asia And Europe Are Suffering

Along with the decrease of demand in export market including the U.S., Europe, and Japan market, Asian economy that depends heavily on export is in crisis. The U.S. and Japan are not really showing a sign of recovery. Recent bearish trend of dollar is also dropping the competitive power of Asian countries.

The first country who received a serious blow is Singapore: A growth rate of economy compared to the last year in one quarter period dropped 11.3 percent, and for the two quarter period, it also dropped 10.7 percent. Official economic depression has begun. Singapore government foresees minus growth rate in the three-quarter also. And it lowered its original economic growth goal of 3.5 percent ~ 5.5 percent to 0.5 percent to 1.5 percent.

Taiwan`s growth rate of economy also dropped 2.35 percent in two quarter due to shrinking domestic consumption and export. It was the first minus growth since 1975.

Taiwan also lowered its original goal of 4.02 percent to minus 0.37 percent. An international credit appraisal body, S & P lowered the level of 8 banks in Taiwan, considering the serious economic slow down in Taiwan.

The central bank of Taipei also changed the goal of economic growth from 2.5 percent ~ 4.0 percent to under 2.0 percent.

The cause of this economic slowdown in Asian countries is due to the decrease of export that was the engine for economic growth.

Exports in June decreased 17 percent in Taiwan and 8~14 percent in Korea, Hong Kong and Malaysia.

The dullness in export is putting Asian countries into an economic crisis, producing a bad cycle of decrease in production – dullness in profits – increasing unemployment –decrease in consumption.

Some expect that the decision of the U.S. FRB to decrease the interest rate will be a new stimulus for Asian countries, however, many professionals think it would be too weak to revive the economy, CNN reported.

Shin Chi-Young higgledy@donga.com