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Daily Archives: April 23, 2009

Japan’s export slump eases, fanning recovery hopes

Japan's export slump eased last month, government data showed yesterday, raising hopes that the world's second largest economy may be through the worst of its deepest recession since World War II.
The glimmers of optimism mirror tentative signs in other major economies, including the United States and China, that the global downturn may finally be abating, even if any recovery is unlikely to be quick, analysts said.
Japanese exports fell 45.6 percent in March from a year earlier, slowing after a record 49.4 percent decline in February, the finance ministry said.
"Exports have hit bottom," said Richard Jerram, chief Japan economist at Macquarie Securities.
Compared with the previous month, exports actually picked up in March, he noted.
"The stage is set for a strong rebound in industrial production and exports in the second quarter of 2009," Jerram predicted.
However, the figures were tempered by news Japan suffered a trade deficit in the fiscal year to March, the first such shortfall in almost three decades.
"The government has to examine whether Japan's international competitiveness is weakening in the area of producing goods," said Finance Minister Kaoru Yosano.
Hopes of a recovery have been growing since Tokyo reported earlier this month an unexpected rebound in machinery orders in February.
"Sentiment among global manufacturers appears to have taken a turn for the better over the past few months," said Credit Suisse economist Hiromichi Shirakawa.
"We expect a Chinese economic recovery to provide support for Japanese exports until the US economy starts to improve," Shirakawa said.
Tokyo's planned stimulus spending of 15.4 trillion yen (156 billion dollars) — about three percent of economic output — is also expected to cushion the blow of the global economic downturn.
Japan's heavy dependence on foreign demand to drive its economy left it vulnerable to the current slowdown, which has sent sales of its key exports cars and televisions, as well as other goods, tumbling.
The country logged a trade deficit of 725.3 billion yen in the fiscal year through March, its first such shortfall since 1980, the finance ministry said.
The economy suffered its worst performance in almost 35 years in the last quarter of 2008, contracting at an annualised pace of 12.1 percent. Analysts warn that the first quarter of 2009 could be just as bad.
The downturn has inflicted heavy losses on iconic companies such as Toyota and Sony, prompting a wave of job cuts.
Japan passed a law yesterday to enable injections of public funds into struggling companies, with electronics makers reportedly set to receive hundreds of millions of dollars in government aid.
Pioneer, Hitachi and Elpida Memory are among the firms considering applying for funds in exchange for stock under the revitalisation law programme.
But financial markets are cautiously hopeful that the global economic downturn is easing, even if rising unemployment is making life tougher for many ordinary people.
Recent data in China have raised hopes that the Asian powerhouse may be enjoying an emerging recovery, helped by a huge stimulus package. Japanese exports to China rose sharply in March from the previous month.
"Exports to China featured positive growth, reflecting solid domestic demand from China. Also the contraction of final demand in the US finally has started to ease," RBS economists wrote in a note.
US President Barack Obama earlier this month said he sees "glimmers of hope" of an economic revival.
But analysts remain cautious about the prospects of a rapid global recovery, even if exports and factory output do stabilise at the current low levels.

ILO economist warns of Asian ‘social crisis’

The global downturn could become a "social crisis" for Asia, a senior International Labour Organisation (ILO) economist said yesterday, warning that millions may be plunged in to long-term poverty.
Gyorgy Sziraczki urged Asian governments to raise welfare spending, citing ILO figures which predicted another 23.3 million could join the region's 90 million unemployed this year.
"If we are facing a long financial crisis, there is a danger we might see a social crisis in the region," Sziraczki, who is based in Bangkok, told a labour forum in Manila.
Those just above the poverty line were particularly at risk, he said, saying the impact of various governments' stimulus spending was still unknown.
Asian countries have seen huge drops in exports and industrial production, reduced growth and more unemployment at a time when many still had young and growing populations, Sziraczki said.
He added that an ILO study had found that Asian governments spent less on "social protection" to the disadvantaged than any other region, including Latin America and Africa.
Young people will find "the doors [of employment] closed to them," Sziraczki said, adding that women workers in the export-oriented garments and electronics industries were also hard hit.
He said Asian countries had avoided large-scale unemployment so far as many workers turned to the "informal sector" or went back to rural areas, but warned "massive employments shifts are still to come in the coming months."
The economist warned the financial crisis could result in "social consequences for years if not decades," and appealed to Asian leaders not to let it reverse gains in social equality achieved over the past decade.