The global economic slowdown continues to take a
toll on Asia. New data from China show growth is slowing, while the South Korean
central bank has made an unprecedented interest rate cut. And things are not
likely to improve next year.
China's government revenue slumped more than
3 percent in November - another sign of the weakening economy.
Chinese Ministry of Finance said Thursday that tax cuts, intended to stimulate
spending and slumping demand, caused the fall in tax revenue. It was the third
straight monthly contraction.
The government also says last month's
inflation rate sank to 2.4 percent, the lowest in nearly two years. Although
consumers might welcome slower price increases, analysts say the decline
indicates weakening demand for consumer goods and commodities.
the Bank of Korea slashed its benchmark seven-day repurchase rate by a record 1
percentage point, to 3 percent. The cut was the fourth in two months and puts
the rate at a historic low.
Lee Seong-tae, the central bank's governor
says the economy will slow down for some time, because exports are likely to
lose steam as the global slump continues.
He says more cuts are possible,
if this jolt to the financial system does not revive lending and
Thursday, the Asian Development Bank cut its forecast for
regional growth. It says Asia's developing economies are likely to average 6.9
percent growth, this year, and 5.8 percent, next year. The non-profit
development lender earlier had expected growth of 7.5 percent this year and
slightly more than 7 percent in 2009.
The ADB says the problem is the
rapid contraction in the American and European markets - cutting demand for
Lee Jong-Wha is the head of the ADB's office of regional
economic integration. He unveiled the new forecasts in Hong Kong and said,
although most Asian economies will not fall as far as the developed markets, the
region will not escape unscathed.
"Our projection is up to now based on
the information, we made a judgment that Asian countries may not get pneumonia,
but still will get a cold," Lee said. "This much is pretty sure. Winter is
coming and we'll get a cold."
He says China and India, which have seen
dramatic growth in the past decade, will see their economies slow. The ADB says
China will expand by about 8.2 percent in 2009. That is down from 9.5 percent
this year, and nearly 11 percent in 2007.
India's growth is forecast to
slow to about 6.5 percent next year, well below the 9 percent expansion, last
Although those growth rates might draw envy from many countries in
recession, Indian and Chinese leaders worry about being able to generate jobs
for millions of unemployed workers.
Many governments, around the region,
are looking for with new ways to kick start (invigorate) their economies. In
Thailand, the government has declared January 2 will be a holiday, in addition
to the traditional holidays of December 31 and January 1. Officials hope many
Thais will use the long break to travel and shop, giving a boost to the tourism
industry, which has been hit hard by both the global economic crisis and
domestic political tensions.
Thursday's flurry of bad news pushed some
Asian stock markets lower. Shanghai's main index was off more than 2 percent.
But the benchmark indexes in Tokyo and Seoul managed to close up by about
three-quarters of a point.