Moody's Analytics: Japan's woes have mixed effect on Asian growth.
Taipei, May 13, 2011 (CENS) -- Moody's Analytics, Inc. recently noted Japan's March 11 disaster, now officially called the Great East Japan Earthquake, will push its economy back into a brief recession. Moody's Analytics has lowered Japan's 2011 GDP growth forecast to 0.7%, from a pre-disaster expectation of a 1.4% expansion.
The impact on growth in the region comes mainly through the trade mechanism. As port disruptions hamper the flow of goods into Japan, other Asia-Pacific nations will see Japan-bound exports weaken in the near term. Yet Japan is a heavy importer of energy and raw materials and will need more of these supplies than normal to make up for local shortages and begin construction.
Shipments of capital and consumer goods form Japan will also decline temporarily, before recovering in the second half of the year. Countries using Japanese-made auto and electronics components in their own production will be hardest hit. Japan's disaster will thus subtract from growth in South Korea, Thailand and Taiwan, although this could be partly offset by these countries benefiting from an increase in market share if buyers shift orders away from hampered Japanese firms.
South Korea: The 2011 GDP forecast has been revised down 0.2 of a percentage point to 4.4%. South Korea is reliant on imports from Japan, particularly electronic parts, as inputs to its production processes. Supply shortages will crimp output and thus harm GDP growth.
Taiwan: The GDP forecast has been revised down 0.2 of a percentage point to 4.7%. Similar to South Korea, exports of electric equipment, machinery, chemical products and metal products to Japan will fall in the near term. Taiwanese manufacturers of LCD display panels, semiconductor equipment, autos and parts will also suffer as components are mostly imported from Japan.
Singapore: Of the entrepot economies, Singapore is more exposed than Hong Kong. Japan represents a slightly larger share of total Singaporean exports relative to total Hong Kong exports, though both are susceptible in the near term to a decline in demand as the Japanese economy contracts.
Hong Kong: Similar to Singapore, Hong Kong could suffer if global trade slows in the immediate months following the Japanese disaster. The near-term decline in import demand as the Japanese economy contracts and outbound shipments are crimped by production disruptions in Tokyo generates downside risk for Hong Kong.
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|Publication:||The Taiwan Economic News|
|Date:||May 13, 2011|
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