Downturn Creeping Into Asia

Japan’s exports fell by 46 percent in January, and Hong Kong’s economy contracted 2.5 percent in the last three months of 2008, furthering signs that the economic downturn in Asia is set to drag on through this year.

Japan leads recession in Asia:
The Japanese economy was one of the first in Asia to tip into recession since last three months of 2008 as weakness stemming from poor domestic demand was mixed with evaporating demand from overseas. Exports plunged 46 percent from a year earlier and imports dropped 32 percent. Similar sharp declines have been reported recently by China and Taiwan also.

Worsening Yen:
Japan’s export decline was significant from a grim December 2008, when exports fell 35 percent. The yen — whose strength against the dollar has made Japanese goods more expensive for American consumers — has weakened during the last three weeks, trading at around 97 to the dollar on Wednesday, compared with about 89 in early February.
Exporters have continually cited the yen as a main reason for sharply reduced sales that are expected to lead to deep losses this year.


Rest of the Continent:
In Hong Kong, the government said on Wednesday that it expected the economy to shrink 2 to 3 percent in 2009. Elsewhere in the region, South Korea said it would start a $13.2 billion fund to bolster its commercial banks .India had Malaysia have already recorded the slowest growth in at least last seven years.
Much of Asia’s growth in recent years was based on an export boom, allowing the recession in the United States and Europe to spread through a region that had been insulated from the American financial troubles that ignited the current downturn.

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