mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
The Asian Malaise: Japanese Edition

The latest sign of economic weakness in Asia comes from Japan. The government’s monthly report on the economy was downgraded for the first time in ten months:

The downgrade highlights the vulnerability of Japan’s economic recovery to slowing global growth, as concerns over the impact of the euro-zone debt crisis chill demand in key export markets such as China.

The government lowered its assessment of exports in the report to “weakening” from “picking up,” after export volume dropped for the second-straight month in July, losing 10.4% from a year earlier.

A Cabinet Office official said that, in addition to already weak exports to Europe, those to the U.S. and Asia were losing steam.

“We’ve seen that demand from Asia is weakening and exports to the U.S. are becoming flat,” he said.

Japan isn’t alone. China, India, and Vietnam are all expecting growth to be significantly below recent averages. The continent as a whole has seen its growth forecast for 2012 downgraded by the Asian Development Bank to 6.6 percent, from 7.2 percent in what was already a slow 2011 (excluding Japan). It isn’t clear at this stage whether these slowdowns represent long-term structural impediments or are merely responses to the tepid economies of its main export destinations. Via Meadia certainly hopes it’s the latter, but the case for a structural slowdown in key Asian economies is getting stronger rather than weaker as time goes by.

Features Icon
show comments
  • Luke Lea

    The whole world is in recession. That is pretty obvious. How will China weather the storm? That is what I am wondering. The Party’s legitimacy is closely tied to the prosperity of the economy. If they lose that, what do they put in its place?

  • Luke Lea

    Here is a good China link:

  • Felipe Pait

    And the answer from the austerity crowd is: “The beatings will continue until morale has improved.”

  • Mark

    what’s interesting about this is that it underlines, once again, the mercantilist nature of Asia as an economic block. For the last few decades, economists (mostly at banks, paid to sell reports, but also from the World Bank and IMF) have been looking for signs that domestic consumption has gained enough critical mass that a ‘decoupling’ has taken place from developed/Western demand -in other words, that domestic consumption has enough momentum and, critically, independence that these countries no longer rely on exports for growth as crucially as they once did. Unfortunately, empirical evidence shows that large parts of the consumption makeup in Asia relies on infrastructure investment and/or exports. Once those drivers weaken, so does domestic consumption. This has certainly been the case in Japan over the last two decades, and is very much the case in China today.
    I don’t know if it is cultural or will change over decades, but an end to the financially repressive, mercantilist policies that predominate in Asia would be a good first step.

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service