TOKYO, Aug. 19 (Xinhua) -- China becomes Japan's biggest trading partner in both exports and imports in the first six months this year, as the global economic downturn affected Japan-U.S. trade more seriously, the Japan External Trade Organization (JETRO) said Wednesday.
Exports to China fell 25.3 percent from a year earlier to 46.5 billion dollars and imports from the country dropped 17.8 percent to 56.2 billion dollars, however, trading with other countries and regions including the United States showed larger declines, JETRO said in its report.
It is the first time exports to China surpassed those to the United States.
Wednesday, August 19, 2009
Global recovery requires US, Asia rebalancing: IMF
WASHINGTON (AFP) - - The global recovery from recession depends on a delicate rebalancing of economies -- notably between the United States and Asia -- to sustain it, the chief IMF economist said.
"The recovery has started. Sustaining it will require delicate rebalancing acts, both within and across countries," Olivier Blanchard said in an IMF article, released in advance of publication Wednesday.
Blanchard cautioned that predictable models based on past recoveries from recessions would not apply to the worst global slump since World War II.
"The world is not in a run-of-the mill recession. The turnaround will not be simple. The crisis has left deep scars, which will affect both supply and demand for many years to come," he said.
In its latest economic forecasts, the IMF estimated in July a global contraction of 1.4 percent in 2009, followed by sluggish growth of 2.5 percent in 2010.
The United States, the epicenter of the crisis, "is central to any world recovery," Blanchard said in the article titled "Sustaining a Global Recovery."
Blanchard said two rebalancing acts will have to come into play to sustain the global recovery: a switch from public to private spending and the rebalancing of international trade flows.
The latter would require "a shift from domestic to foreign demand in the United States and a reverse shift from foreign to domestic demand in the rest of the world, particularly in Asia," he said.
Pointing to a decline in American household consumption -- which "represents 70 percent of total US demand" -- and a rise in the personal saving rate that is expected to persist for some time, Blanchard estimated a 3.0 percentage point drop in the ratio of consumption to US gross domestic product, a broad measure of economic output.
With the 3.0 percent drop unlikely to be made up by increased investment and the eventual phase-out of the massive fiscal stimulus, "US net exports must increase" for the US recovery to occur, he said.
Key to the rebalancing act will be an increase in foreign demand for US goods, particularly in countries with large current account surpluses, notably in China and other Asian countries.
"From the point of view of the United States, a decrease in Chinas current account surplus would help increase demand, and sustain the US recovery. That would result in more US imports, which would help sustain world recovery," the top economist at the 186-nation institution said.
China may be willing to pursue that "because it may well be in its own interest," said the economist, but other emerging market Asian countries that run large current account surpluses have weaker incentives than China to boost internal demand.
Blanchard said that Asia appeared the best-placed to tip the trade balance.
"If rebalancing is to come soon, it probably has to come largely from Asia, through a decrease in saving, and an appreciation of Asian currencies vis-a-vis the dollar," he said.
In a typical recession model, he said, lower-than-normal growth gives way to higher-than-normal growth for some time, until the economy has returned to its normal growth path.
"The current global recession is far from normal," he said, citing the breakdown in parts of the economic system.
"In advanced countries, the financial systems are partly dysfunctional, and will take a long time to find their new shape," he said.
Emerging market countries may not see dwindled capital inflows return to pre-crisis levels for a few years.
The end result of the global crisis: possibly a permanently lower potential output, he said.
Blanchard said the IMF's upcoming edition of the twice-yearly World Economic Outlook will cover 88 banking crises over the past four decades in a wide range of countries.
"While there is large variation across countries, the conclusion is that, on average, output does not go back to its old trend path, but remains permanently below it."
"The recovery has started. Sustaining it will require delicate rebalancing acts, both within and across countries," Olivier Blanchard said in an IMF article, released in advance of publication Wednesday.
Blanchard cautioned that predictable models based on past recoveries from recessions would not apply to the worst global slump since World War II.
"The world is not in a run-of-the mill recession. The turnaround will not be simple. The crisis has left deep scars, which will affect both supply and demand for many years to come," he said.
In its latest economic forecasts, the IMF estimated in July a global contraction of 1.4 percent in 2009, followed by sluggish growth of 2.5 percent in 2010.
The United States, the epicenter of the crisis, "is central to any world recovery," Blanchard said in the article titled "Sustaining a Global Recovery."
Blanchard said two rebalancing acts will have to come into play to sustain the global recovery: a switch from public to private spending and the rebalancing of international trade flows.
The latter would require "a shift from domestic to foreign demand in the United States and a reverse shift from foreign to domestic demand in the rest of the world, particularly in Asia," he said.
Pointing to a decline in American household consumption -- which "represents 70 percent of total US demand" -- and a rise in the personal saving rate that is expected to persist for some time, Blanchard estimated a 3.0 percentage point drop in the ratio of consumption to US gross domestic product, a broad measure of economic output.
With the 3.0 percent drop unlikely to be made up by increased investment and the eventual phase-out of the massive fiscal stimulus, "US net exports must increase" for the US recovery to occur, he said.
Key to the rebalancing act will be an increase in foreign demand for US goods, particularly in countries with large current account surpluses, notably in China and other Asian countries.
"From the point of view of the United States, a decrease in Chinas current account surplus would help increase demand, and sustain the US recovery. That would result in more US imports, which would help sustain world recovery," the top economist at the 186-nation institution said.
China may be willing to pursue that "because it may well be in its own interest," said the economist, but other emerging market Asian countries that run large current account surpluses have weaker incentives than China to boost internal demand.
Blanchard said that Asia appeared the best-placed to tip the trade balance.
"If rebalancing is to come soon, it probably has to come largely from Asia, through a decrease in saving, and an appreciation of Asian currencies vis-a-vis the dollar," he said.
In a typical recession model, he said, lower-than-normal growth gives way to higher-than-normal growth for some time, until the economy has returned to its normal growth path.
"The current global recession is far from normal," he said, citing the breakdown in parts of the economic system.
"In advanced countries, the financial systems are partly dysfunctional, and will take a long time to find their new shape," he said.
Emerging market countries may not see dwindled capital inflows return to pre-crisis levels for a few years.
The end result of the global crisis: possibly a permanently lower potential output, he said.
Blanchard said the IMF's upcoming edition of the twice-yearly World Economic Outlook will cover 88 banking crises over the past four decades in a wide range of countries.
"While there is large variation across countries, the conclusion is that, on average, output does not go back to its old trend path, but remains permanently below it."
Sunday, August 9, 2009
IMF upgrades South Korea economy forecast
SEOUL, Aug 9 - The IMF upgraded its 2009 economic forecast for South Korea for the second time in a month on Sunday, and said concerns about rising housing prices can be best addressed with prudent regulations.
The International Monetary Fund also said in a report released after its annual policy review that the country's economic policy should continue to support growth until Asia's fourth-largest economy secures a self-sustained recovery.
The comments came as domestic bond yields have risen on speculation among investors that the recovering economy from the crisis and the rising housing prices would persuade the central bank to start to lift interest rates soon.
"While a moderate recovery is likely to take hold next year, in line with global growth prospects, the possibility of another bout of global risk aversion poses a downside risk," it said.
"Accordingly, Directors agreed that macroeconomic policies should continue to focus on supporting growth until a self-sustained recovery is firmly established."
The IMF raised its forecast for South Korea's 2009 economic growth to a contraction of 1.8 percent from a fall of 3.0 percent, which was an upgrade last month from a 4.0 percent drop seen previously.
It praised South Korea's swift implementation of a series of emergency schemes aimed at protecting the local economy since the collapse of Lehman Brothers in mid-September sent the global economy plunging into the worst downturn in decades.
It advised South Korea to deal with the rising housing prices with regulatory measures.
"While vigilant monitoring of monetary conditions continues to be necessary, with their impact on asset prices taken into account in monetary policy deliberations, concerns about rising house prices are best addressed through prudential regulations, pending housing market reforms."
South Korean housing prices rose for a fourth consecutive month in July, data showed early this month, just a few weeks after the central bank expressed his concerns about the fast growth in mortgage lending.
The Bank of Korea held the benchmark interest rate steady at a record low of 2.0 percent for the past five consecutive months after cutting the 7-day repurchase agreement rate by a total of 3.25 percentage points since October last year.
It next reviews the rate on Tuesday.
For next year, the IMF maintained its view that the economy would return to growth with a 2.5 percent expansion.
This compares with the Bank of Korea's projection of a 1.6 percent fall and the finance ministry's forecast of a 1.5 percent drop. Private-sector economists have also rushed to upgrade their forecasts, with Morgan Stanley now predicting a 0.5 percent fall.
In July, Morgan Stanley upgraded its forecast for South Korea's economic growth in 2009 to -0.5 percent from -1.8 percent and to 5.0 percent from 3.8 percent in 2010. (Reporting by Seo Eun-kyung and Yoo Choonsik; Editing by Mike Nesbit)
The International Monetary Fund also said in a report released after its annual policy review that the country's economic policy should continue to support growth until Asia's fourth-largest economy secures a self-sustained recovery.
The comments came as domestic bond yields have risen on speculation among investors that the recovering economy from the crisis and the rising housing prices would persuade the central bank to start to lift interest rates soon.
"While a moderate recovery is likely to take hold next year, in line with global growth prospects, the possibility of another bout of global risk aversion poses a downside risk," it said.
"Accordingly, Directors agreed that macroeconomic policies should continue to focus on supporting growth until a self-sustained recovery is firmly established."
The IMF raised its forecast for South Korea's 2009 economic growth to a contraction of 1.8 percent from a fall of 3.0 percent, which was an upgrade last month from a 4.0 percent drop seen previously.
It praised South Korea's swift implementation of a series of emergency schemes aimed at protecting the local economy since the collapse of Lehman Brothers in mid-September sent the global economy plunging into the worst downturn in decades.
It advised South Korea to deal with the rising housing prices with regulatory measures.
"While vigilant monitoring of monetary conditions continues to be necessary, with their impact on asset prices taken into account in monetary policy deliberations, concerns about rising house prices are best addressed through prudential regulations, pending housing market reforms."
South Korean housing prices rose for a fourth consecutive month in July, data showed early this month, just a few weeks after the central bank expressed his concerns about the fast growth in mortgage lending.
The Bank of Korea held the benchmark interest rate steady at a record low of 2.0 percent for the past five consecutive months after cutting the 7-day repurchase agreement rate by a total of 3.25 percentage points since October last year.
It next reviews the rate on Tuesday.
For next year, the IMF maintained its view that the economy would return to growth with a 2.5 percent expansion.
This compares with the Bank of Korea's projection of a 1.6 percent fall and the finance ministry's forecast of a 1.5 percent drop. Private-sector economists have also rushed to upgrade their forecasts, with Morgan Stanley now predicting a 0.5 percent fall.
In July, Morgan Stanley upgraded its forecast for South Korea's economic growth in 2009 to -0.5 percent from -1.8 percent and to 5.0 percent from 3.8 percent in 2010. (Reporting by Seo Eun-kyung and Yoo Choonsik; Editing by Mike Nesbit)
Thursday, July 23, 2009
SKorean economy grows 2.3 percent in Q2
SEOUL (AFP) - - Surging exports and consumer spending fuelled growth of 2.3 percent for South Korea's economy in the three months to June, its fastest rate in more than five years, data showed Friday.
The quarter-on-quarter growth in gross domestic product (GDP) was up sharply from the first quarter's slender gain of 0.1 percent, the central Bank of Korea said.
"Exports of goods sharply rebounded and consumer spending picked up in the second quarter," it said in a statement.
It marked the fastest growth of GDP for Asia's fourth-largest economy since a 2.6 percent increase in the fourth quarter of 2003.
But compared with a year earlier, the economy shrank 2.5 percent.
The quarter-on-quarter growth in gross domestic product (GDP) was up sharply from the first quarter's slender gain of 0.1 percent, the central Bank of Korea said.
"Exports of goods sharply rebounded and consumer spending picked up in the second quarter," it said in a statement.
It marked the fastest growth of GDP for Asia's fourth-largest economy since a 2.6 percent increase in the fourth quarter of 2003.
But compared with a year earlier, the economy shrank 2.5 percent.
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