Far East Recession Pressure

The US China trade war is adding pressure to the world economy with a threat of a global recession starting off in the Far East and spreading.  Recession is no immediate threat to the largest economies in Asia, they have slowed down but it is smaller economies that are at most risk.

The latest figures saw China’s gross domestic product (GDP) grow 6.2% in the second quarter, its slowest since the early 1990’s and with approximately 20% of the country’s exports being sent to the US and the billions of dollars taxed imposed it is adding more pressure. Beijing has cut taxes and infrastructure spending with the government still targeting growth around 6% pa for 2019.

Hong Kong’s GDP fell 0.4%pa in the 3 months to June compared to the previous quarter.   

India’s GDP fell to 5.8% the lowest in 5 years. India’s central Bank has cut interest rates 4 times already to try and stimulate the economy.

Japan’s latest figures saw GDP in the second quarter increase by just 0.4% pa.  Companies in Japan also remain at risk when sales taxes increasing in October.

Singapore with its high-tech exports GDP fell 3.3% in the second quarter.  The government has cut its growth forecasts for 2019 to below 1% pa.

South Korea on the other hand grew 1.1% in the 3 months to June compared with the previous quarter and for the first time in 3 years their central bank cut interest rates.

Comment

Global contagion is on its way.  Expected European and North American central banks to start stimulating their economies too.