Data from across Asia show the troubles in the West, and tighter money, are starting to be felt in the manufacturing economies of the East.
In India, GDP growth slowed to 7.7% in the first quarter of the 2012 fiscal year, compared with 8.8% in the April-June quarter a year ago, itself revised down from an initial reading of 9.3%. It was the slowest pace since the second quarter of fiscal 2010.
The big loser was manufacturing, which dropped to 7.2% growth from 10.6% at the same time a year earlier. The Reserve Bank of India has raised interest rates by 325 basis points in 11 moves over the last 17 months in an effort to slow inflation.
Some Indians say it’s time for a pause. Industry “would urge the RBI to refrain from hiking interest rates in the forthcoming policy meeting, (on Sept. 16), taking note of the weakness in the economy,” Chandrajit Banerjee, director general of the Confederation of Indian Industry, told the indiatimes.
Inflation in June slid to 9.44%, compared with 9.56% in May.
Estimates for the full 2012 fiscal year currently forecast growth will slow to between 8.0% and 8.5%.
Meanwhile, industrial production in both Japan and Korea is showing a the global economy is having an impact on output. In Japan, recovering from a devastating earthquake and tsunami, industrial output in July was up 0.6% from the previous month — the fourth consecutive month of expansion — but less than half of expectations of 1.5%.
And the Economy Ministry says companies answering a survey said they expect to cut production by an average of 2.4% in September, compared with a 2.8% increase in August.
In Korea, output in July increased 3.8% from a year earlier, far less than estimates of 6.6% and the slowest pace of growth since September of 2010. Statistics Korea says the seasonally adjusted figure shows growth declined 0.4% from June.
Korea’s numbers show manufacturers are cutting inventory ahead of an uncertain outlook for the global economy, Woori Investment economist Sun Yoo told the Wall Street Journal.
“Downside risks to our economy are increasing as external conditions deteriorate,” South Korean Finance Minister Bahk Jae-wan told the Journal. “But the trend of gradual economic recovery will continue given exports and domestic demand conditions.”
The easiest way to play Korea’s numbers is the ETF EWY, while INDY is one of the newest of the numerous funds that provide exposure to the Indian market.