Asia is hard-hit by the downturn in the Western economy. Today, China said its Q4 GDP had grown just 6.8%, the slowest level since 2001. This led premier Wen Jiabao to say the outlook for jobs was “very grim”. It also increased speculation that China will devalue the renmimbi, which would increase trade tensions within Asia and with the USA.
The root cause is a decline in exports, which account for 37% of China’s GDP. Japan’s exports are also suffering, down 35% in December. Taiwan saw a 40% drop, whilst S Korea’s industrial production is now declining at the fastest rate since 1975. In turn, this has very worrying implications for petchem producers. Many Asian countries send 50% of their production to China, to be re-exported as manufactured goods to the West.
Meanwhile, the outlook in the West is still getting worse. Housing is a key driver for chemical demand, and today the US government announced that total 2008 housing starts were just 904,000, down 33% from 2007 levels, and the lowest annual rate since records began in 1959. December housing starts were even lower, at only 550,000 on an annualised rate.