Thesun 2009-02-18 Page18 Japan Sentiment Near Record Low

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theSun

| WEDNESDAY FEBRUARY 18 2009

business

Japan sentiment near record low TOKYO: Confidence among recessionhit Japanese manufacturers remains near record lows, a Reuters poll indicated yesterday, and service-sector sentiment also showed buyers at home and abroad were losing faith. With the world’s second-largest economy stuck in its worst contraction in a generation, the Reuters Tankan monthly poll provided more evidence of a deepening recession as demand crumbles and companies cut jobs. The survey was released on the day US President Barack Obama is to sign his US$787 billion (RM2.7 trillion) stimulus package, a plan his new administration hopes will save or create 3.5 million jobs. It also came as US Secretary of State Hillary Clinton began talks with Japanese officials in Tokyo that would include ways to cope with the global crisis as fears rise of a return to 1930s-style protectionism in the US. She said the global crisis demanded a coordinated response. Obama’s plan, and a bank bailout that could top US$2 billion, are meant to address a recession he inherited after US housing and credit markets collapsed, dragging European and Asian economies into recession. Japan has suffered a sharper con-

traction than other major economies because of its heavy dependence on exports combined with persistently soft domestic demand. Those factors were echoed in fourth quarter GDP data released on Monday which showed Japan’s economy shrank by 3.3%, its worst result since the first oil crisis in 1974. Japan’s woes were exacerbated by the scandal surrounding Finance Minister Shoichi Nakagawa over his embarrassing performance at a G7 meeting in Rome at the weekend. Nakagawa said he would resign after Japan’s budget passes. The Reuters Tankan, a monthly poll of 214 firms that tracks the Bank of Japan’s tankan survey, showed most respondents remained pessimistic even though they expect a slight improvement in business conditions in the next three months. Manufacturers’ sentiment edged up to minus 74 in February, up two points from the previous month, which had marked the lowest since the survey began in June 1998. Sentiment among electric machinery and autos/transport equipment sectors – two of Japan’s leading industries – rose by the same amount but confidence among non-manufacturers worsened by 8 points to a record low of minus 39. – AFP

Singapore exports in biggest fall on record SINGAPORE: Singapore’s key exports in January fell by the largest amount on record, the government said yesterday, releasing data showing further evidence of the city-state’s deepening recession. Non-oil domestic exports (NODX) fell by 34.8% in January compared with the same month a year earlier, said International Enterprise Singapore, the government’s trade promotion agency. It is the biggest fall since the government began year-on-year comparisons in 1977 and exceeds the previous record of a 30.7% drop in September 2001, after Al Qaeda’s attacks on the United States. January’s decline was the ninth consecutive contraction and was almost in line with the 34.5% median forecast in a poll of economists by Dow Jones Newswires. The decline last month exceeded the 20.8% year-on-year fall recorded in December, the data showed. Shipments to all 10 key markets were lower in January, with exports to the major US market falling 50%, the agency said. The city-state is Southeast Asia’s wealthiest economy in terms of gross domestic product per capita but its heavy dependence on trade makes it sensitive

to economic disturbances in developed nations, whose economies are suffering in the world’s worst economic crisis since the Great Depression of the 1930s. Singapore in October became the first Asian economy to enter recession. NODX to China – whose economy slowed dramatically at the end of last year – were down 51.6%, the agency said. On a month-on-month seasonally adjusted basis, NODX fell by 3.2% in January after the previous month’s 11% decrease, it said. The key exports were worth S$10.04 billion (RM23 billion) in January, a fall of 34.8% from a year earlier, data showed. Alvin Liew, an economist with Standard Chartered Bank, said he expects Singapore exports to continue their “dismal” performance at least for the first half of the year. Singapore twice downgraded its growth forecasts in January, most recently after data showed the economy contracted in the fourth quarter by its largest amount since records began in 1976. The government now sees shrinkage of between 2% and 5% for this year, after estimated growth of 1.2% in 2008. – AFP

‘Financial system still far from healthy’ PARIS: The global financial system is still far from sound and the toxic debt blighting bank balance sheets is undermining government recovery efforts, the head of the IMF warned yesterday. “The whole world’s financial system is not yet healthy and thus recovery effects are not sufficiently strong,” Dominique StraussKahn, managing director of the International Monetary Fund, told France Inter radio. “We must finish the job of cleansing bank balance sheets,” he insisted, complaining that some banks and national regulators were not working quickly enough to identify and isolate the bad credit which provoked the collapse.

“I’m worried, because the plans that are being put in place are headed in the right direction but don’t go far enough,” he warned, calling for more coordination between governments struggling with national recovery plans. Some countries have partly or wholly nationalised banks hit by the credit crisis, others have pushed through rapid mergers and some experts have said so-called “bad banks” must be established to absorb toxic debt. Many commentators fear, however, that billions of dollars in unpayable loans are still lurking on institutions’ books, disguised in a thicket of complex financial instruments and undermining trust in the credit market. – AFP

briefs Qantas to cut China, India routes MELBOURNE: Australian carrier Qantas announced cuts to “underperforming” routes to China and India yesterday, and said it was handing its domestic New Zealand services to discount offshoot Jetstar. Qantas CEO Alan Joyce said the airline made the changes after closely monitoring its international operations amid turbulence created by the global economic crisis. “The Qantas Group is performing well in this difficult environment but we are not immune from the need to address underperforming routes. We are reluctantly making changes to our China and India schedules, but will continue to offer significant capacity into both countries as they remain important business and leisure markets.” The airline will cut direct flights from Sydney to Beijing and Mebourne to Shanghai, although flights between Sydney and Shanghai will increase. Qantas also cut direct flights from Australia to Mumbai, with all services to the Indian financial capital to operate via Singapore from mid-May. In New Zealand, Qantas will withdraw completely from the domestic market so budget arm Jetstar can take over, although flights between Australia and New Zealand will increase. – AFP

Asia stocks tumble, dollar up HONGKONG: Asian stocks fell yesterday, with Japan’s Nikkei hitting a three-month low, while the US dollar surged as investors scrambled for safety from deteriorating global economic conditions and volatile banks. US stock futures fell 1.6%, indicating a weak open on Wall Street after a holiday on Monday. European shares dropped more than 1% overnight on fears that losses in the financial sector will worsen and require more government aid, setting the tone for the Asian session. A more than 3% decline on Hongkong’s Hang Seng index led the region down, with banks such as China Construction Bank and HSBC under pressure. Japan’s Nikkei fell 1.45%, hitting its lowest since November 2008. – Reuters