Saturday, 16 May 2009

Exporting nations clobbered by the absence of voracious consumerism

The dependence of exporting economies on a robust and voracious consumerist culture is highlighted by the dramatic slumps being seen for Japanese manufacturers and other Asian economies. The following was reported on Friday in the FT on the hit being taken in Hong Kong:

Hong Kong’s economy contracted at the fastest rate since the Asian financial crisis in the first three months of this year as exports passing through the territory saw their biggest drop in more than half a century.

The government on Friday predicted gross domestic product would contract by up to 6.5 per cent this year, after announcing the economy had shrunk at an annual rate of 4.3 per cent in the first quarter of 2009.

Equally depressing was the news this week from Europe - where Germany, the workshop of the EU, is seeing the largest drop in GDP since records began in 1970.

The rapidly deteriorating position of the Eurozone economies is discussed in this article

Germany's economy shrank by 3.8pc in the first three months of the year - a record contraction that is almost double the fall of Britain's gross domestic product in the first quarter. The figures sparked attacks on Germany's government, which has repeatedly shown reluctance to bail out either its economy or financial system.

In figures described by economists as "disastrous", Eurostat also reported that Italy shrank by 2.4pc, Austria and the Netherlands by 2.8pc, Spain by 1.8pc and France by 1.2pc.
The article also includes the ominous warning from the IMF that more financial shocks may lie ahead.
Within hours, the managing director of the International Monetary Fund (IMF) warned that the global recession is far from over and that people must prepare themselves for more financial shocks. Dominique Strauss-Kahn said the world remains in the grips of a "Great Recession" and played down talk of "green shoots".

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