Second-quarter GDP reports raise red flags . . .
Most Asian economies reported GDP contractions in the second quarter of this year as they face economic downturns stemming from the pandemic. The economies slammed hardest are those heavily dependent on international trade, and particularly those with significant exports to the U.S and Europe where lockdowns have shrunk consumption and international travel. But there is diversity within these contractions: While Japan, Thailand and Malaysia are facing record economic contractions, a few others, such as South Korea and Taiwan, have managed to dampen the impact.
Some are recording new lows . . .
Japan reported on Monday that its GDP shrank 7.8 per cent in the second quarter compared to the first quarter, its worst record since 1955. The main factors in Japan’s downturn were drops in domestic consumption and auto exports to the U.S. and Europe. On the same day, Thailand’s Office of the National Economic and Social Development Council announced that its GDP fell 9.7 per cent on a seasonally-adjusted quarterly basis, representing the most significant contraction since the Asian financial crisis in the late 1990s. Thailand’s heavy reliance on tourism and exports accounts for most of this slump. And Malaysia’s Central Bank announced on August 14 that its economy contracted 17.1 per cent in the second quarter as investment and private consumption fell considerably.
Some are handling it better than others . . .
The diversity of economic performance in the region amidst the pandemic is notable. China’s GDP rebounded with 3.2 per cent growth in April-June after a decline of 6.8 per cent in the first quarter of this year. And while South Korea and Taiwan’s GDPs shrank 3.3 per cent and 1.4 per cent, respectively, in the second quarter over the first, high demand in semiconductors and other technology products and an increase in domestic consumption have softened the blow.