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.