Southeast Asian problems add to pressure on Japan<\/p>\n
TOKYO (AFP): Economic problems sweeping much of Southeast Asia
\nare likely to put further pressure on the Japanese economy in the
\ncoming months, with exports to the region particularly in
\nquestion, economists said yesterday.<\/p>\n
\"The negative impact of recent Asian currency falls on the
\nJapanese economy is emerging as Japan's exports to ASEAN
\ncountries slow -- and are expected to continue slowing,\" Susumu
\nKato, chief economist at BZW Securities, said.<\/p>\n
Toshio Sumitani, an economist at Tokyo Research Institute,
\ntold AFX-Asia that the negative impact of the regional downturn
\non the Japanese economy would not be \"negligible as Japan's
\nexports to the region account for more than 20 percent of the
\ntotal.\"<\/p>\n
\"Exports to Thailand fell about 14-to-15 percent year-on-year
\nin June,\" Sumitani said.<\/p>\n
\"Falls in Japan's exports to Indonesia and Malaysia have not
\nbeen seen yet but are expected to emerge,\" he said, citing
\ncontinued declines in the rupiah and the ringgit.<\/p>\n
But Sumitani said that such a development may help to contain
\nthe rise in Japan's trade surplus as exports weakened.<\/p>\n
Japan exports mostly capital goods to Asia, supplying local
\ndemand and re-export markets in the United States, Europe and
\nJapan.<\/p>\n
To the extent currency weakness feeds through to lower
\ndomestic demand in Southeast Asian countries, this would weigh on
\nJapan's economy in coming months, though the impact was difficult
\nto quantify.<\/p>\n
Asia as a whole is Japan's biggest single trading partner,
\naccounting for more than 40 percent of Japanese trade, of which
\nthe bulk is capital goods, economists said.<\/p>\n
\"The real threat to Japan stems from the 'second round' effect
\nof the currency turmoil on Asia's domestic economies,\" said JP
\nMorgan economist Jesper Koll.<\/p>\n
\"Fiscal austerity programs will curtail both public and
\nprivate investment and thus imports of capital goods,\" Koll said.<\/p>\n
\"Japan's exports are sure to take a hit -- the only question
\nbeing how severe the slump will be,\" he said.<\/p>\n
Overall, the expected slowdown may exacerbate the build up of
\ninventories, which has been weighing on Japanese growth.<\/p>\n
Kato said part of the export slack will be taken up by
\nexpected further growth of Japanese exports to the United States
\nand Europe.<\/p>\n
\"But you cannot expect exports to the U.S. and Europe to
\ncontinue rising,\" he said. \"Japan cannot afford to keep
\nincreasing exports to the U.S. and Europe, because it does not
\nwant to rekindle trade friction.\"<\/p>\n
Over the past decade, Japanese industry has shifted much of
\nits production capacity to Asia, to the extent that as many as
\none in seven Thai's work for Japanese affiliated companies,
\neconomists said.<\/p>\n
This shift of physical capacity has come as Japan's banks have
\nboosted their position in the region, although the Asian
\ncomponent for Japan's institutional investors is relatively
\nmodest, they said.<\/p>\n
\"But for the banks, Asia now accounts for 70 percent of their
\nforeign loans -- nearly 120 billion dollars,\" Koll said. \"This is
\nmore than three times as much as exposure as U.S. banks have to
\nthe region. Of these loans, US$37.5 billion is due from Thai
\nborrowers.\"<\/p>\n
Koll said that on a worst-case assumption, that half of all
\nloans to Asia would need to be written off, this could total 1.5
\npercent of total loans.<\/p>\n
While the $16.7 billion International Monetary Fund (IMF)
\nrescue package would help Thailand, Joll said, \"Japanese banks
\nwill almost certainly have to increase their provisions for bad
\nAsian loans -- a hit that comes at a bad time, given that their
\ndomestic loan problems are still far from completely solved.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/southeast-asian-problems-add-to-pressure-on-japan-1447893297",
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