News / Asia

Japanese Quake Has Limited Effect on Southeast Asia Economies

A man runs past Samsung Electronics Co.'s mobile phone Galaxy S advertisement outside its head office in Seoul, South Korea (FILE).
A man runs past Samsung Electronics Co.'s mobile phone Galaxy S advertisement outside its head office in Seoul, South Korea (FILE).
TEXT SIZE - +
Daniel Schearf

The disaster in Japan is expected to affect economies in Southeast Asia, but economists say the damage is likely to be limited. They say the region may even see increased investments from Japan as companies seek to diversify away from areas at higher risk from natural disasters.

Japan supplies Southeast Asia factories with components and parts put into cars, electronics, and other products for export, including back to Japan.

That supply chain was disrupted when the earthquake and tsunami hit Japan's northeast, damaging a nuclear plant and forcing many factories to stop production.

Many Southeast Asian countries export to Japan. The Japanese market accounts for about 20 percent of Indonesia’s exports and 17 percent of what the Philippines sends abroad, down to smaller amounts from countries including Cambodia, Laos, and Singapore.

Regional economists say exports may suffer this year. But with Japanese damage assessments and the situation at the nuclear plant uncertain, estimates of the cost to trade are tentative.

Tim Condon, the chief Asia economist for ING Financial Markets in Singapore, said a worst-case scenario would be similar to the 2008 global financial crisis, when Japan’s imports dropped by nearly half.

"If the earthquake damage is that severe we could see damage on the order of 0.7 percent of GDP in Indonesia, about half that in the case of Philippines, and then something even lower than that in the rest of the Southeast Asian economies. So, it ranges from a chunky number in the case of Indonesia, to kind of a negligible figure in the others."

Condon said the best-case scenario would be damage similar to the 1995 Kobe earthquake, which cost Japan about 2 percent of its GDP but saw regional trade recover quickly.

The World Bank said this week that earthquake and tsunami reconstruction could cost Japan up to $235 billion and take up to five years.  

But Japan’s economic growth is expected to pick up in the second half of this year as reconstruction gets underway.

Lei Lei Song, a senior economist with the Asian Development Bank, said that barring any major nuclear contamination, Japan's economy should rebound relatively quickly, and along with it, the trade with Southeast Asia.

"We're still assessing the impact in terms of the GDP growth. But, I guess it's very modest.  It would not change the robust growth we are currently expecting for Southeast Asian economies," said Song.

Southeast Asia's economies grew by about 7 percent last year.

Song said Thailand is one of the countries in Southeast Asia most exposed to economic effects from Japan, partly because of its flourishing auto industry. Thailand is referred to as the Detroit of Southeast Asia because major car companies have factories here.

Condon said Thailand’s auto factories could have some short-term problems obtaining parts from Japan, but that the disaster would not seriously hurt the industry.

"My thinking is that it will probably be the reverse," he said. "They will look to diversify their production sites and move things to cheaper and less earthquake-prone destinations."

Thailand also is tied closely to Japan’s economy through debt. More than 60 percent of Thailand’s foreign debt is in Japanese yen and any appreciation raises the costs for paying it back.

Economists say even if the yen appreciates, though, it will not be difficult for Thailand to deal with it because its external debt is not high.

You May Like

Analysts Warn of Regional Proxy Conflict in Afghanistan

Analysts warn if Kabul’s neighbors do not start to cooperate, competing desires for influence could deteriorate into a bloody proxy war in the country More

Saudi Intelligence Chief Replaced

Bandar bin Sultan came under criticism for supporting al Qaida, prompting King Abdallah to wrest Syria operations away from him in February, handing them to Interior Minister Prince Mohammed bin Nayef More

Poetry Magazine editor Don Share talks what makes a good poem with VOA's David Byrd

What makes a good poem? And is poetry as viable an art form as it once was? To find out, VOA's David Byrd spoke to Don Share, the editor of Poetry Magazine. More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Google Buys Drone Companyi
|| 0:00:00
...
 
🔇
X
George Putic
April 15, 2014
In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Ray Bonneville Sings the Blues and More on New CD

Singer/songwriter Ray Bonneville has released a new CD called “Easy Gone” with music that reflects his musical and personal journey from French-speaking Canada to his current home in Austin,Texas. The eclectic artist’s fan base extends from Texas to various parts of North America and Europe. VOA’s Greg Flakus reports from Austin.
Video

Video Millions Labor in Pakistan's Informal Economy

The World Bank says that in Pakistan, roughly 70 percent work in the so-called informal sector, a part of the economy that is unregulated and untaxed. VOA's Sharon Behn reports from Islamabad on how the informal sector impact's the Pakistani economy.
Video

Video Passover Celebrates Liberation from Bondage

Jewish people around the world are celebrating Passover, a commemoration of their liberation from slavery in Egypt more than 3,300 years ago. According to scripture, God helped the Jews, led by Moses, escape bondage in Egypt and cross the Red Sea into the desert. Zlatica Hoke reports that the story of the Jewish Exodus resonates with other people trying to escape slave-like conditions.
Video

Video Police Pursue Hate Crime Charges Against Kansas Shooting Suspect

Prosecutors are sifting through the evidence in the wake of Sunday’s shootings in a suburb of Kansas City, Missouri that left three people dead. A suspect in the shootings taken into custody is a white supremacist. As VOA’s Kane Farabaugh reports, he was well-known to law enforcement agencies and human rights groups alike.
Video

Video In Eastern Ukraine, Pro-unity Activists Emerge from Shadows

Amid the pro-Russian uprisings in eastern Ukraine, there is a large body of activists who support Ukrainian unity and reject Russian intervention. Their activities have remained largely underground, but they are preparing to take on their pro-Moscow opponents, as Henry Ridgwell reports from the eastern city of Donetsk.
Video

Video Basket Maker’s Skills Have World Reach

A prestigious craft show in the U.S. capital offers one-of-a-kind creations by more than 120 artists working in a variety of media. As VOA’s Julie Taboh reports from Washington, one artist lucky enough to be selected says sharing her skills with women overseas is just as significant.
Video

Video UN Report Urges Speedier Action to Avoid Climate Disaster

A new United Nations report says the world must switch from fossil fuels to cleaner energy sources to control the effects of climate change. The Intergovernmental Panel on Climate Change released the report (Sunday) following a meeting of scientists and government representatives in Berlin. The comprehensive review follows two recent IPCC reports that detail the certainty of climate change, its impacts and in this most recent report what to do about it. VOA’s Rosanne Skirble has the details.
AppleAndroid