2008年04月03日17:44
Here is a big lesson of the first global financial crisis of the 21st century: Some old-fashioned economies are weathering the storm better than those that borrowed heavily to spur growth or those that bet on debt-strapped U.S. consumers.
The U.S., the economy at the center of the crisis, is dragging down world growth. On Wednesday, Federal Reserve Chairman Ben Bernanke gave his most pessimistic assessment to date of the U.S. economy's outlook, strongly suggesting a recession is likely.
'It now appears likely that gross domestic product will not grow much, if at all, over the first half of 2008, and could even contract slightly,' he said in testimony before the Joint Economic Committee of Congress. Mr. Bernanke said the Fed projects slower global growth over the coming quarters.
But beyond the U.S., the impact of the downturn is uneven.
Countries like Australia, Brazil, the United Arab Emirates and Qatar are still expanding smartly, although down from 2007, because they have rich veins of oil, iron ore, alumina and copper. Old-line industrial-goods makers such as Germany and Japan are riding out the problem because they have diversified their markets for heavy machinery.
Meanwhile, consumer-goods exporters of Asia that rode to prosperity by trading with the U.S. -- Thailand, Philippines, Malaysia and even China -- are seeing their lofty growth rates sag. And the Baltic countries, Hungary and Iceland, which borrowed heavily to finance growth, are now watched by international financial institutions to see whether they will become unhinged by the credit squeeze that began with troubles in the U.S. housing market.
Imagine the crisis like a tornado. It formed in Florida, California, Nevada and other states where housing markets crashed. It picked up power as securities tied to mortgages produced immense losses by major financial firms in the U.S. and Europe. That has battered the U.S. economy, dried up credit in the U.S. and some parts of Europe, prompted the U.S. Federal Reserve to slash interest rates and weakened the dollar. Now, the financial tornado is coursing its way around the globe, battering some places while leaving others largely unscathed.
The health of the global economy will be at the center of discussions in Washington over the coming week as finance ministers gather for the spring meetings of the International Monetary Fund and World Bank starting on April 12. On the agenda: what steps to take to revamp global financial regulation, ease the global credit squeeze and boost growth.
'The remarkable difference between this period of financial upheaval and those in the past is the performance of developed and developing countries,' World Bank President Robert Zoellick said in a speech on Wednesday at the Center for Global Development, a Washington think tank. 'Not only has the epicenter of the quake shifted [away from developing countries], but so far the tremors have shaken markets differently.'
Right now, the global economy looks well positioned to weather the turmoil, but that could turn out be a faulty prediction if the U.S. falls into a deep, lingering recession. The global economy is expected to grow 3.8% this year, compared with 4.7% a year earlier, according to numbers to be released Thursday by Peterson Institute for International Economics, a Washington think tank.
Resource-rich countries -- including Russia, Brazil and Australia -- are poised to keep prospering. Vast appetites for raw materials in China, India and elsewhere give commodity producers alternatives to the U.S. market, and have lessened the chance of a commodities crash.
In Australia, Anglo-Australian mining giant Rio Tinto PLC is progressing with a $1.8 billion alumina-refinery expansion in Queensland, while its rival, BHP Billiton Ltd., recently authorized $850 million in spending as part of a large natural gas project off the Australian coast. Last month, Apex Minerals NL, in Perth, said it successfully raised about $56 million in a share placement with investors in the U.S. and elsewhere for a gold-mining project in Western Australia.
Russia, a center of the previous global financial crisis in the late 1990s, now touts its economy as a 'safe harbor' thanks to surging prices for its oil, gas and other commodity exports. Brazil, another late '90s loser, has become a new economic pillar thanks to soaring demand for iron ore, coffee and sugar.
Brazil's interest rates are heading downward after years in the stratosphere, giving Brazilians relatively inexpensive credit that they are plowing into new homes, cars and small businesses. General Motors Corp. sold a record 499,000 vehicles in Brazil last year, even as the company struggled in the U.S. Big U.S. investment banks are expanding in Brazil to take advantage of a record number of initial public offerings and other deals.
'So far, Main Street Brazil is untouched by the crisis,' says Luis Largman, the chief financial officer of Cyrela Brazil Realty, a São Paulo-based home builder. Last July, just as the subprime crisis was beginning, his company scrapped plans for a bond sale meant for U.S. investors. It turned around and raised the funds, about $285 million, among Brazilian investors at nearly the same cost. The company is now posting record sales.
For some commodity producers, the biggest danger is overheating. Middle Eastern oil producers are sinking their new wealth into government-financed roads, airports and new oil and gas field development. But all the new spending is stoking inflation. That is exacerbated by a sharply falling dollar, which raises the price of imports in Persian Gulf nations that peg their currencies to the dollar.
In Qatar, inflation is running at 14%. In the United Arab Emirates, inflation has triggered a series of violent protests by expatriate laborers angered by their falling buying power. In response, some governments in the region are lifting customs duties on construction materials and food imports, and boosting government salaries by as much as 70%.
A number of world economies may be in for pain -- including Turkey and the parts of Eastern and Central Europe that have borrowed heavily on global markets to finance heavy spending on consumer goods and real estate.
Romania, Bulgaria, Hungary and the Baltic trio of Latvia, Lithuania and Estonia could now face a drying up of credit. That raises the risk of a replay of the 1990s financial crisis, when Latin America, Russia and Southeast Asia couldn't repay their foreign-currency debts, causing banks and companies to fail and plunging economies into recessions.
One of the newly vulnerable countries is tiny Iceland. At the end of last year, its foreign debts, held mainly by banks, amounted to 430% of its gross domestic product, several times the level in, for example, the countries of Eastern Europe. The global credit crunch means Iceland's banks must pay higher interest now to borrow funds abroad that they can lend at home. That will force local companies and households to curtail their borrowing and spending. Iceland's policy makers say the country will escape ruin because banks still have ample funds to service their debts. They also say the economy is set to earn export revenues following recent investments in aluminum smelting.
Still, the country's currency, the krona, is under heavy pressure and the cost of buying insurance for debts owned by Icelandic banks has shot up to the highest levels for any country's lenders. That usually means investors believe a debt default is a strong possibility. Iceland's Kaupthing Bank says it is considering legal action against the investment bank Bear Stearns Cos. for publishing research that compared Iceland unfavorably to Kazakhstan, and for helping to organize a trip to Iceland earlier this year by a group of hedge funds. The bank suspects the trip may have been part of preparations for a speculative attack on the country's financial system, say people familiar with Kaupthing's thinking. A Bear Stearns spokeswoman declined to comment.
Many investors also are dubious about Baltic countries' ability to fund their huge deficits in trade and other foreign income, known as current-account deficits. Latvia, for instance, had a current-account deficit equivalent to nearly 23% of its gross domestic product -- compared with about 5% for the U.S. -- driven by cheap credit, a real-estate boom and its citizens' voracious appetite for imports.
Asian consumer-goods exporters also face a slowdown because their economies' fortunes are tied so tightly to U.S. consumer spending, which has been slumping. A replay of the 1990s financial crash in the region is very unlikely, though, because Asian nations have built hoards of cash reserves and steep current-account surpluses, which they could use to pay off foreign debts.
In the 1980s and 1990s, Thailand lifted itself from poverty by attracting foreign companies to build cameras, televisions and refrigerators there and then sell them to consumers in the U.S. Over the past few years, Thailand's exporters have been trying to wean themselves off dependence on U.S. shoppers. But it isn't easy. Exporters in China, Vietnam, Malaysia and elsewhere in Asia are trying the same thing, deepening competition. Plus, the patterns of global trade are so complex that it's not easy to steer products to a particular destinations.
Today, a component made in Asia is frequently plugged into a television or mobile phone being assembled in China, then sold on to the U.S. and other markets. Hana Microelectronics PCL in Bangkok sells electronic components to big U.S. firms, which sell finished goods across the world. 'We sell to global markets through American customers, so there's not much of an adjustment we can make. We can't flip from one market to another,' says Terry Weir, Hana Microelectronics' chief financial officer.
Low-cost manufacturers in China are also having problems coping. The slumping dollar is pushing up the value of China's currency, which used to be locked at 8.3 yuan to the dollar, and making Chinese exports more expensive in dollar terms. After gaining 7% in 2007, the yuan is up another 4.3% so far this year. Chinese Premier Wen Jiabao has declared himself 'deeply worried' about the U.S. economy. Export manufacturers are an important source of the 50 million new jobs he has promised to create over the next five years.
In Shengzhou, a city south of Shanghai that claims to make 40% of the world's neckties, Taishen Necktie & Costume Co. says it sells 70% of its output to Wal-Mart Stores Inc. But the company's owner, Zhang Jienan, worries that he will be priced out of the market because of the rising yuan. 'I could feel the declining orders from the U.S. since early this year. I think that could be caused by the decline of the U.S. economy,' says Mr. Zhang. Overall, for the first two months of 2008, China's export growth has dropped below 20% for the first time in recent years.
Wall Street's woes have already helped take some of the air out of the Shanghai Composite Index since the Chinese benchmark stock index peaked with other global markets last October. It has dropped 40% since then. That hasn't yet appeared to damp consumer sentiment, though: China's retail sales have continued to expand by around 20% in the first two months of the year, even accounting for higher inflation.
European consumer-goods companies are also feeling the pinch. Emerging economies are churning out their own simple products less expensively. A declining dollar has made Italian clothes, French wine and German cars more expensive for U.S. consumers.
Exports account for about 70% of the sales of Look Cycle International SA, based in Burgundy, France, and the U.S. is one of its biggest markets. Late last year, Look cut the euro prices it charges its U.S. unit for importing bicycles by 15%, so its bikes' prices wouldn't soar in U.S. shops. That cut into its own profits, it says. Now that a dollar is worth barely 63 European cents, Look doesn't bother to swap its U.S. revenues for euros. Instead, it keeps the dollars in a bank account and hopes the dollar will strengthen.
But European nations that are big exporters of capital goods -- such as the heavy tools and machinery used in manufacturing -- are faring better. Companies in Germany, Switzerland and parts of Italy have so far managed to blunt the effects of the rising euro by diversifying away from the U.S. market. Unlike their consumer-goods counterparts, these manufacturers are still able to rely on sales to emerging economies. Machinery sales also depend on quality of engineering, where some European companies may be perceived to have an edge.
More than 40% of Germany's total exports of euro970 billion ($1.513 trillion) in 2007 were capital goods. Overall, the German exporters' association expects exports to grow by 5% this year. That is down from more than 8% in 2007 but it is still a vital prop to Europe's largest economy. Energy-rich Russia has become Germany's fastest-growing export market.
Marcus Walker / James Hookway / John Lyons / James T. Areddy
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