23 January 2009 06:08 [Source: ICIS news]
(Recasts lead for clarity)
By Pearl Bantillo
SINGAPORE (ICIS news)--Asia’s fast-paced expansion has been derailed by the slump in exports as the US-centric financial crisis has morphed into something far worse and the world may be looking at its worst recession ever, economists said on Friday.
“Prepare for things to get worse,” said David Cohen, chief economist at research firm Action Economics.
A review of the extent of the damage that the credit crunch and the extremely weak external demand has done to Asia may prompt financial stability overseer International Monetary Fund to significantly revise down its 2.2% growth forecast for the world economy.
Given the region’s heavy trade dependence with the ?xml:namespace>
“There is no meaningful prospect of any pick up in global demand. It is not going to happen at least in the next couple of quarters,” said Ray Attrill, Australia-based global research director at consultancy firm Forecast.
Some economists were projecting its GDP expansion to decelerate to as low as 5% coming from a 9% clip last year.
“Exports, including petrochemical products, will be very terrible this year due to shrinking overseas demand,” said Huang Feng, analyst at Tianjin-based Bohai Securities.
“We are still confident that
“The Chinese government has the money and the work for putting that money into good use,” he said. Some of the key industries that are expected to grow rapidly with the support of government funds include nuclear power generation, city rail system and passenger aircraft, he said.
Government policies that drive basic petrochemical exports could also help support the
Other Asian economies, however, would take time to recover, economists said.
“For the others, we’ll just have to wait,” said Cohen of Action Economics, adding that exports from Taiwan, South Korea, Singapore and Japan had deteriorated sharply in December and it could take at least a few months before hitting a bottom.
The country is suffering from a “double-whammy” of falling exports and strong currency. “It (
Its export-oriented companies, including petrochemicals, have been incurring heavy foreign exchange losses since last year.
Attrill expects the yen to continue strengthening despite the country’s gloomy economic prospects.
The currency’s movement is more dictated by investors’ risk appetite, which is currently at its nadir, supportive of the yen, analysts said.
Judith Wang and Chow Bee Lin contributed to this story
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