Japan’s economic snuffles contrast with the health of emerging Asia, where rapid growth has re-established itself since the global economic crisis.
Thailand, thought to be one of the region’s weaker economies because of its political problems, surprised economists this week by reporting year on year growth in gross domestic product of 9.1 per cent for the second quarter, in spite of more than two months of highly-disruptive anti-government demonstrations.
That followed comparable figures of 8.9 per cent in Malaysia, 12.5 per cent in Taiwan, 6.2 per cent in Indonesia, 7.2 per cent in South Korea and an extraordinary 17.9 per cent in Singapore. China had earlier reported growth of 10.9 per cent. India has not reported but a survey of economists by the central bank forecast growth of 8.7 per cent. The unknown is the extent to which these blistering growth rates are sustainable. Although South Korea and Thailand performed better than expected, growth slowed slightly in Malaysia and more sharply in China, where it was down from nearly 12 per cent in the first quarter.
Some of this was deliberate – as in China, where Beijing is deliberately slowing the runaway economy – or officially sanctioned, as in Malaysia, where the central bank is walking a policy tightrope between growth and inflationary pressures.
However, leading indicators suggest that a more general slowdown is likely in the second half of the year. Purchasing managers’ indices, which measure manufacturing activity, were at multi-month lows in July in China, South Korea and Taiwan.