Japan's earthquake to impact Asia significantly: Standard Chartered chief economist

11:10, April 27, 2011      

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The Japanese earthquake will impact Asia in terms of international trade, foreign direct investment and supply chains, Gerald Lyons said lately at Asia House in London.

"Small and open economies in Asia are incredibly volatile and always more exposed to any shocks," said Lyons, adding Singapore, Thailand and China's regions of Hong Kong and Taiwan will have more volatile trade due to the Japanese massive earthquake, while bigger economies including India, Indonesia, Chinese mainland tend to be better able to cope with the disruption.

Statistics from Standard Chartered Research Department show that Singapore, among all the Asian economies, has the biggest gap between the maximum and minimum of year-on-year quarterly growth in the past 10 years.

The Japanese disaster is set to disturb foreign direct investment in many other Asian economies, as Japan is a major source of FDI in Asia, said Lyons.

"Two countries will be affected most, namely, Thailand, with 23.3 percent of its FDI coming from Japan, and South Korea, with 16.8 percent." Lyons added.

Meanwhile, as Japan is a major supplier of IT parts and auto parts in the world, this devastating earthquake disaster is disrupting global supply chains, said Lyons.

In terms of IT parts, Japan owns over 50-percent world market shares in anisotropic conductive films, commercial wafers, wrought rolled copper foil and LCD steppers. And it produces large amounts of auto parts to not only Japanese but also foreign brands like Ford, General Motor and Peugeot.

According to Lyons, in Asia, key losers out of the Japanese earthquake include chipmakers, electronic and IT manufacturers in South Korea and Taiwan, electronic and IT manufacturers as well as auto assemblers in Southeast Asian nations and Greater China, Japan-sourced importers and restaurants in Hong Kong and Singapore, while key winners will be wafer producers in South Korea and Taiwan, producers of food, oil and LNG, consumer products, construction goods and car parts in Southeast Asian nations and Greater China, hotel and real estate sectors in Hong Kong and Singapore which will benefit from an influx of foreign expatriates relocating from Japan.

Source: Xinhua
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