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Growth of exports to China slows; major Asian nations post unfavorable indices
Worries are growing over the possibility that Korea’s economic growth will be undermined by the gloomy indices of major Asian countries.
Apart from the eurozone debt crisis, Asian countries facing symptoms of an economic slowdown include China, Japan, India, Indonesia and Vietnam, according to think tanks at home and abroad.
Economists say there is a possibility that the Chinese economy could undergo a hard landing due mainly to recently sagging exports and mounting inflationary pressure.
China saw its export growth rate plunge about 11 percentage points from 31.3 percent in 2010 to 20.3 percent in 2011.
The country’s investment growth has been on a downward trend ― 30.5 percent in 2009, 24.5 percent in 2010 and 23.8 percent in 2011.
Furthermore, its consumer prices climbed by 4.5 percent in January from a year before, exceeding market participants’ earlier estimate of 4.1 percent.
Citing the indices, major global organizations and investment banks predicted China’s gross domestic product growth would fall below 9 percent.
Over the past few years, the Asian superpower recorded a yearly growth rate of more than 9 percent ― 9.6 percent in 2008, 9.2 percent in 2009, 10.4 percent in 2010 and 9.2 percent in 2011.
Japan’s snowballing sovereign debt has also emerged as a red light to the Korean economy.
Last year Japan suffered a trade deficit of 1.6 trillion yen for the first time in 48 years since 1963, while it posted a trade surplus of 8 trillion yen in 2010.
There are projections among investment banks that the country will see a heavier trade deficit over the next 10 years.
According to the Organization for Economic Development, Japan saw the ratio of sovereign debt to GDP come to 211.7 percent in 2011. The ratio is projected to reach 219.1 percent this year.
India’s economic growth is projected to stay below 7 percent, its lowest level since 2009, according to investment banks.
The inflation rate of the third-largest economy in Asia is hovering at 7.4 percent despite a series of interest rate hikes since March 2010.
Indonesia and Vietnam are also suffering from high consumer prices.
Amid the uncertainty, Korea saw its exports to Asian economies grew only 15.1 percent in January, compared to a 39.5 percent growth a year earlier.
Markedly, growth of the nation’s exports to China stood at 7.3 percent, compared with 24.2 percent a year earlier.
When China’s GDP growth goes down by 1 percentage point, Korea’s GDP growth will decline by 0.22 to 0.38 percentage point, the Korea Institute for International Economic Policy predicted.
The Korea Center for International Finance forecast a drop by 0.3 to 0.5 percentage point in Korea’s growth under the assumption of a 1 percentage point fall in China.
“If China has a hard landing with a growth rate below 8 percent, Korea’s GDP growth could stay at below 3.5 percent,” a research fellow at Hyundai Economic Research Institute forecast.
By Kim Yon-se (kys@heraldcorp.com)
Worries are growing over the possibility that Korea’s economic growth will be undermined by the gloomy indices of major Asian countries.
Apart from the eurozone debt crisis, Asian countries facing symptoms of an economic slowdown include China, Japan, India, Indonesia and Vietnam, according to think tanks at home and abroad.
Economists say there is a possibility that the Chinese economy could undergo a hard landing due mainly to recently sagging exports and mounting inflationary pressure.
China saw its export growth rate plunge about 11 percentage points from 31.3 percent in 2010 to 20.3 percent in 2011.
The country’s investment growth has been on a downward trend ― 30.5 percent in 2009, 24.5 percent in 2010 and 23.8 percent in 2011.
Furthermore, its consumer prices climbed by 4.5 percent in January from a year before, exceeding market participants’ earlier estimate of 4.1 percent.
Citing the indices, major global organizations and investment banks predicted China’s gross domestic product growth would fall below 9 percent.
Over the past few years, the Asian superpower recorded a yearly growth rate of more than 9 percent ― 9.6 percent in 2008, 9.2 percent in 2009, 10.4 percent in 2010 and 9.2 percent in 2011.
Japan’s snowballing sovereign debt has also emerged as a red light to the Korean economy.
Last year Japan suffered a trade deficit of 1.6 trillion yen for the first time in 48 years since 1963, while it posted a trade surplus of 8 trillion yen in 2010.
There are projections among investment banks that the country will see a heavier trade deficit over the next 10 years.
According to the Organization for Economic Development, Japan saw the ratio of sovereign debt to GDP come to 211.7 percent in 2011. The ratio is projected to reach 219.1 percent this year.
India’s economic growth is projected to stay below 7 percent, its lowest level since 2009, according to investment banks.
The inflation rate of the third-largest economy in Asia is hovering at 7.4 percent despite a series of interest rate hikes since March 2010.
Indonesia and Vietnam are also suffering from high consumer prices.
Amid the uncertainty, Korea saw its exports to Asian economies grew only 15.1 percent in January, compared to a 39.5 percent growth a year earlier.
Markedly, growth of the nation’s exports to China stood at 7.3 percent, compared with 24.2 percent a year earlier.
When China’s GDP growth goes down by 1 percentage point, Korea’s GDP growth will decline by 0.22 to 0.38 percentage point, the Korea Institute for International Economic Policy predicted.
The Korea Center for International Finance forecast a drop by 0.3 to 0.5 percentage point in Korea’s growth under the assumption of a 1 percentage point fall in China.
“If China has a hard landing with a growth rate below 8 percent, Korea’s GDP growth could stay at below 3.5 percent,” a research fellow at Hyundai Economic Research Institute forecast.
By Kim Yon-se (kys@heraldcorp.com)
