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Industrial trends around the world


As predicted the drop in export demand has hit countries other than China and Japan. Many analysts, however, do predict much of Asia's growing consumer base will play a major role in a global recovery.

As with China, Japan and the rest of the world, India, and South Korea are also suffering from declining economic and industrial growth that is mainly due to decreased export orders. Although economists' numbers show reduced growth, many analysts are also optimistic about Asia's ability to bounce back. Experts also report that Asian countries are hit by plummeting exports, from the double-digit growth of the past decade to double-digit declines, declining domestic demand and rising unemployment.

In addition unemployment is projected to rise in the region by up to 23 million workers in 2009 due to drops in export demand. In January, the export decline had reached most of Asia, with drops in Malaysia by 34 percent, Singapore (40 percent), the Philippines (41 percent), Taiwan (44 percent), South Korea (34 percent), Thailand (27 percent) and India (16 percent).

In February, however, the drop was much less severe for most countries, except China. China's export decline has increased to 26 percent. This is important to note because over 60 percent of China's imports come from the rest of Asia and about half of the components assembled in China are now sold to wealthier nations. This becomes a problem because if China's exports to the U.S., Europe and Japan decline, it will buy less imports of parts that are used in making the exports.

In addition given the regionally integrated nature of the production base in Southeast and East Asia, these import declines may reflect the beginning of an industrial crisis. Countries that rely on manufacturing exports are going to be the worst hit.

Experts also project that economic growth in the Asia-Pacific region's developing countries to fall from 5.8 percent in 2008 to -0.7 percent in 2009. Economist predict a more depressing 2009 with an economic growth forecast for Malaysia at -3 percent, Singapore -7.5 percent, Thailand -4.4 percent, Indonesia -1.3 percent, South Korea -5.9 percent and Taiwan -6.5 percent.

India is the only one among this group of Asian countries to have positive growth that is expected in the range of 4.5 percent, to 5 percent. Still, India's economy is suffering from lack of investment, which has accounted for 39 percent of its GDP in fiscal year 2008. In the last quarter of 2008, foreign loans and direct investment were down by nearly a third.
It has become apparent that the sudden slowing in the flow of foreign funds will make it harder for the country to grow fast enough to pull hundreds of millions of people out of stifling poverty.

Yet despite all the pessimism, analysts are predicting a recovery, with improvements in the economic situation already being seen.For the first time in five months, Indian manufacturing has recently expanded. Manufacturing makes up about 16 percent of India's GDP, and the Reserve Bank expects its economy to pick up at around 6 percent in late 2009/early 2010 which is somewhat higher than economist's expectations. Standard and Poor's says India's economy will grow by 5.8 percent in 2009, making it the second-fastest growing economy should China only grow at 8 percent. As far as jobs go, more than 60 percent of companies in India are still hiring with salaries that are expected to increase by 8.2 percent in 2009.

Despite the slowdown, foreign companies are still investing in India, although considerably less than in previous years. Pepsi Co plans to spend $500 million, Universal Success Enterprises of Singapore is injecting $17.5 billion in infrastructure projects, Norway's Telenor is investing $3.2 billion in Indian telecom and Marriott International plans to build 24 new hotels throughout India. This also does not include domestic companies investing in their country and all kinds of outsourcing firms looking to India for growth.

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