Signs of a Global Slowdown
Although mainstream media is reluctant to provide widespread coverage about it, cracks in the global economy have started to emerge.
Singapore
While we may be concerned with stagflation scenarios here in the United States, Singapore is scrambling to repair its economy. Consumer prices rose 4.4% in the last twelve months while their economy contracted by 5.0% on an annualized basis during Q4 2007. Should this quarter’s GDP figures show another contraction, Singapore would be, by definition (two consecutive quarters of contracting growth), in a recession [1]. Singapore is experiencing stagflation, and given the recent run up in oil, precious, metals and commodities, will continue to do so in the months ahead.
India
GDP forecasts in India have been revised down from 9.0% to between 7-8%, both as a result of weakening global conditions and dampened domestic consumer lending. According to a research report by Lehman Brothers, the slowdown is being led by the nation’s industrial and services sectors, with growth falling for “capital goods, entertainment & media, and steel and pharmaceuticals. However, packaging, chemicals, fertilizers and automobiles bucked the trend, showing a higher growth in the December ’07 quarter, compared to December ’06. [2] ” The bottom line as I see it, is that even a high growth country like India isn’t immune to the US slowdown - they just won’t be hit as hard.
Japan
Japan’s exports rose, making for great headline news. Dig a little deeper and you find that exports to the United States have fallen for 5 straight months. The Bank of Japan has already revised its GDP forecasts downward for FY 2009, and if export weakness continues, may make further downward revisions [3]. While the Bank of Japan isn’t forecasting a recession, the county’s GDP forecasts face significants export driven risks lead by consumer and housing weakness in the United States.
Can the boom in commodities continue given these weaknesses?
[1] Stagflation Hits Singapore as Inequity Grows: Andy Mukherjee
[2] Life of India Inc in the slow lane
[3] Japan Exports Rise but Trade Gap Biggest in Two Years
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My name is Arpan and this is my blog! I'll be writing about things I find interesting, and hopefully some stuff that you might too. Some posts are intentionally controversial and are intended to provoke discussion. Don't be shy!
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