Effects of Global Recession on East Asia, Pacific Region

Apr.12.09 | About: Morgan Stanley (APF)

This month, World Bank released the “Battling the forces of global recession”, an economic update for the East Asia and Pacific Region report. The following are some interesting charts from this report that show the effects of the current global recession on these countries :

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1. Industrial Production

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Taiwan is the worst affected country in terms of industrial production.On a year-over-year basis it fell by over 40% in January. Since Taiwan is mainly an export-driven electronics manufacturing hub, it is heavily impacted due to the fall in demand for these consumer discretionary items in the developed world. China has a small positive growth probably due to domestic demand for industrial goods.

2.Exports Relative to GDP

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Singapore and Hong Kong top the list as they are the trading hubs most involved in exporting goods to other countries.

3.Impact of Commodity Price Declines3-commodity-price-impact.JPG

As the graph shows, economies that are more dependent on commodities are affected more than the ones whose economies are mode diversified. For eg- Malaysia is a significant exporter of rubber and palm oil.

4. Non-Performing Assets

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The non-performing loans of financial institutions are relatively low when compared to the western countries. It is under 2% in Korea and China which is very good.

5. Equity Prices

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The stock prices of emerging markets fell more than the developed markets late last year. However they have recovered much faster and are now leading the developed market indices. Countries such as China and India are up over 25% from recent lows.