The recent export-import data from China, Korea and Taiwanshows the crisis has become much deeper. Earlier we saw the crisis impacting only the financial channel, but now it is impacting the trade channel fully (see a review of these channels here). Economist has an excellent review of recent China trade data and world trade situation.
- China- exports declined by 2.2% in November compared to November 2007 (also called as year on year growth), ; imports by 17.9%
- South Korea- exports declined by 18.3% in November (year on year); imports by 14.6%. Exports climbed 8.5 percent in October and 28.2 percent in September. As a result, Korea cut rates by 100 bps
- Taiwan- exports declined by 23.0% in November
What is more worrisome is the sharp fall in trade data. Like the inflation data trade data is falling from the cliff. These are all export driven economies and it clearly suggests economic activity is weakening considerably now. Moreover, exports contribute almost 30% of the world growth and this does not look good at all now.
India also saw a sharp decline in exports and imports in month of October. Exports declined by 12.1% and imports grew at 10.6% (in September it was 10.4% and 43.3% respectively). It looks like we are staring at much worse number from Nov onwards.
Hold on to year seat belts as they say.