Asia’s economies signalled they are best placed to weather Europe’s debt crisis this week as data from China’s exports to job growth in South Korea and Australia surpassed analysts’ forecasts.
Regional stocks rose after a report showed Chinese shipments abroad climbed 48.5 per cent in May from a year earlier, more than the 32 per cent median forecast in a Bloomberg survey, and separate figures showed a jump in property prices. Unemployment rates in South Korea and Australia fell last month, according to government figures, and Japan reported its economy expanded more than previously estimated in the first quarter.
The resilience may amplify American calls for Asian nations to reduce reliance on exports and increase their contribution to a world recovery clouded by Europe’s fiscal woes. China has so far resisted letting its yuan rise against the dollar, seeking to shield exporters, while Japan’s central bank has flagged the recovery in refraining from stepping up injections of cash.
“These numbers are very positive,” said Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada. “Asian countries have pretty strong fiscal positions and they’ve got growing domestic demand which will help insulate against any shocks out of Europe.”
Also, the “sharp pick-up in China’s trade surplus will not go unnoticed in Washington, where there will be more pressure on the US administration out of Congress to take a tougher line with China” on its currency, Jackson said.
The economic reports helped stoke a surge in stock markets around Asia. The MSCI Asia Pacific Index rose 0.8 per cent to 110.68 as of 1:54 pm in Tokyo, and S&P Index in Sydney advanced 1.1 per cent at 3:40 pm in Sydney. In contrast the Standard & Poor’s 500 Index lost 0.6 per cent to 1,055.69 as of 4 pm in New York yesterday.
Asia’s growth contrasts with several European nations that may see their gross domestic product shrink, with the risk of a “double dip” recession, Andrew Burns, lead writer of the World Bank’s Global Economic Prospects 2010 report, said in a telecast from Washington late June 9. Burns didn’t single out European countries by name.
Eastern Europe, Central Asia and Latin America are the developing regions most in danger of an impact from the crisis that started in Greece, he said.
East Asia wouldn’t be unscathed by a return to recession in the advanced economies, Burns added.
