It’s not only Australia that has tied its economic fortunes to China.
Figures out yesterday confirm that the economies of Japan, Taiwan and Singapore are as deeply attached as we are.
Thanks to a 6.9% rise in exports in the March quarter, the Japanese economy grew an annual 4.9%, or 1.2%, from the December quarter.
More than half the quarterly growth of 1.2% came from exports. That 1.2% (preliminary) growth estimate was the largest in a decade.
But the annual and quarterly rates were less than forecasts from the market of 5.4% (Reuters) and 5.9% (Bloomberg surveys), but it was nevertheless solid and a long way ahead of the US (3.2% annualised, first estimate) and Europe and Germany (0.2% from the previous quarter).
Analysts said the pace of the economic growth is due to robust demand and increased sales in emerging countries, especially in China, with that in turn encouraging increased investment at home by Japanese businesses.
Corporate capital investment increased for the second quarter in a row, rising a modest 1%, as exports rise by almost 7%.
In fact over half of Japan’s exports in the March quarter and year to the same month went to China and Asia.
But there were some one-off items that made the figures look a bit better.
Private consumption, which makes up about 60% of the economy, grew 0.3% in the quarter. That was a bit better than expected, driven by government stimulus for cars and consumer electronics.
One particular scheme saw a rush in demand for flat-screen television sets ahead of an April change in a government incentive scheme for low-emission electronic goods.
The result compared to the revised annualised 4.2% growth in the December quarter.
But the big negative was another poor figure for the GDP deflator.
It fell 3% (as it did in the first reading for the December quarter). That was later revised up to the reported minus 2.7%.
But the domestic demand deflator improved to be down 1.9% in the quarter from a year earlier, and just up from the December quarter, the first rise in this measure for almost two years.
Strong growth, a perk up in demand for consumers, driven by Government stimulus, but continuing deflation.
It’s better than a year with deflation and contracting growth.
And Singapore’s strong rebound early estimates for first quarter growth upgraded in the first official estimate.
The government said GDP grew an annual 38.6% in the March quarter, from the December quarter.
That compares with the so-called ‘flash’ forecast estimate of 32.1% last month.
The economy grew 15.5% in the first quarter from a year earlier, compared with 13.1% estimate last month.
Singapore said its non-oil domestic exports will probably rise by between 15% and 17% this year, up from January’s forecast for a 12% rise.
Despite this strong rebound, the government has left its 2010 full year GDP forecast steady at a range of 7% to 9%, indicating it is a bit wary about the strong Chinese economy slowing and the financial uncertainty coming from Europe.
Singapore has raised its growth forecast twice this year and the central bank said last month it will allow the currency to strengthen, a sure sign the government sees the worst of the crunch and recession is over.
But like Japan, the growth report came before the escalation in the European financial crisis in April.
But there was a warning about the possible impact of the European problems yesterday from the government.
“Developments in recent weeks suggest that downside risks have intensified,” the trade ministry said.
“There is heightened market anxiety over the possibility of a sovereign debt default in Europe. While policy makers in the EU have introduced timely and forceful interventions to reduce the downside risk in the near term, significant uncertainties remain beyond the immediate horizon.”
It also said there continues to be concerns over “excessive” asset-price inflation in emerging Asia.
“Should investor sentiments wane or if more monetary tightening measures are introduced, sharp asset price corrections could follow,” the ministry said.
“If these risks materialize, they could affect the global recovery and negatively impact Singapore.”
(And of course Australia and Japan.)
The government said growth came from strong rises in manufacturing, construction and services (especially tourism).
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In Taiwan growth in the first quarter grew at the fastest in 30 years, thanks to the Chinese economy.
The Government said GDP rose 13.27% in the three months to March, from the same quarter of 2009 (which was very depressed in Taiwan’s case).
That was faster than any forecasts.
As a result the Government has raised its 2010 growth forecast to 6.14% from 4.72%.
A year ago Taiwan’s economy contracted at an annual rate of almost 11% in the March quarter.
