Three years after the global recession blamed in part on debt-fueled U.S. consumption and insufficient Asian spending, Asia’s top three exporters are again finding American consumers a boon as their economies slow.
Japan’s exports to the U.S. jumped 17 percent so far this year from 2011, even as total shipments slumped 0.7 percent, government data showed yesterday. China’s exports are up 10 percent to America in January-through-August, outpacing a 7 percent total gain. South Korean sales to the U.S. climbed 6.1 percent, against a 1.5 percent overall drop.
Rising U.S. demand is proving a cushion as Europe’s crisis curbs a global rebound from the 2009 recession that spurred the Group of 20 nations to commit to rebalancing spending away from the world’s largest economy. The reliance raises risks for Asian exporters should the so-called fiscal cliff of budget tightening curtail American outlays at year-end.
“They are still holding the baton, moving forward,” said Thomas Lam, chief economist at OSK-DMG in Singapore, referring to U.S. consumers. “The idea of rebalancing and moving demand out of the key advanced economies -- particularly the U.S. --and having emerging markets like China and India take that role is a bit far-fetched at this juncture.”
A lack of social safety nets and developed financial markets that would allow emerging-market households to cut precautionary savings and expand their spending undermines prospects for the rebalancing, according to Lam, who correctly predicted the end of the 2007-2009 U.S. recession. “It’s not really a clear cut path for the U.S. consumer, because of the looming fiscal shock,” he also said.
Asian stocks jumped after the Federal Reserve unveiled its third round of so-called quantitative easing to help bring down the U.S. unemployment rate, before stalling this week. The MSCI Asia Pacific Index was little changed for the week as of 6:11 p.m. in Tokyo, leaving it up 2.1 percent since the Fed’s Sept. 13 decision to buy $40 billion of mortgage debt a month.
Economic data from the Asia-Pacific region today showed Macau’s consumer prices rose 6.33 percent in August from a year earlier, up from a 6.04 percent pace in July. New Zealand said credit-card spending rose 1.9 percent in August from a year earlier, compared with being little changed in July, according to revised figures.
In Europe, a report from Belgium is forecast to show that businesses there became less pessimistic this month, according to a Bloomberg News survey. The U.K. releases public-finance figures for August and the Netherlands publishes data for consumer spending in July.
In North America, Mexico may say its unemployment rate rose in August to 5.1 percent, the median estimate of 10 economists surveyed by Bloomberg News.
Japan’s trade data yesterday showed a 10th straight monthly advance in shipments to the U.S., with gains from automobile parts and construction machinery to mining and engines contributing. The American purchases helped ease the impact of declines in exports to Europe and China, which propelled Japan’s seventh-largest trade deficit on record.
Kubota Corp., a Japanese maker of industrial and farm machinery, was raised to “buy” at Citigroup Inc. this month in part because of American demand for small tractors. Hyundai Motor Co. and Kia Motors Corp. sold 11 percent more vehicles in the U.S. in August than a year ago.
The reliance on American spending persists three years after the G-20 emerging and developed nations established a peer-review process to monitor individual efforts to rebalance their economies, and hand emerging markets a greater say in managing world growth.
Global finance chiefs are scheduled to gather in Tokyo next month for the annual meetings of the International Monetary Fund and World Bank. The IMF will cut its projections for world growth by “a few decimal points,” Hoe Ee Khor, an assistant director in the IMF’s Asia and Pacific Department, said on a conference call with reporters yesterday. Updated forecasts are scheduled for Oct. 9, ahead of the Tokyo meetings.
The World Trade Organization today trimmed its prediction for the increase in global commerce in 2012 to 2.5 percent, from 3.7 percent five months ago.
Earlier, the IMF today cut its estimate for South Korea’s gross domestic product to a 3 percent gain for 2012, from a June prediction of 3.25 percent. Khor said the Washington-based lender will probably lower the forecast further next month.
Japan’s central bank this week downgraded its assessment for the world’s No. 3 economy, saying growth had “come to a pause.” The Bank of Japan also followed the Fed in applying greater stimulus, adding 10 trillion yen ($128 billion) to its asset-purchase program.
China’s economic slowdown may last longer than during the global financial crisis because of worsening external demand and limited lending to smaller companies, a state researcher said. The pace of expansion may slow for a ninth straight period to below 7 percent in the first quarter, Yuan Gangming, an economist with the Chinese Academy of Social Sciences, said in an interview Sept. 19 in Beijing.
Yuan, who formerly headed CASS’s Office of Macroeconomic Research in the Institute of Economics, forecast 7.4 percent expansion in the third quarter and 7.2 percent in the last period of the year.
While U.S. unemployment remains in excess of 8 percent, a recovering housing market has helped shore up consumers. Sales of previously owned homes and work on single-family projects climbed in August to the highest levels in two years, reports showed this week. The Fed said separately that household real estate assets increased to $19.1 trillion from $18.7 trillion. Owners’ equity as a share of household property holdings improved to 43.1 percent last quarter from 41.6 percent.