Southeast Asia Could Be Sinking To A Potentially Deep Recession!

Something not to discount.

From Dow Jones.

• A sharp contraction in Thailand's quarterly economic growth confirmed fears that much of Southeast Asia - until recently a relative bright spot in the world economy - is sinking into a potentially deep recession.
  
  Growth was already nose-diving in Singapore, the region's financial capital, and Malaysia is expected to see a sharp deceleration in economic activity when it reports its most recent quarterly data this coming Friday. Layoffs are piling up at textile factories and semiconductor plants, and economists warn the region's previously-announced stimulus packages won't be enough to offset spiraling declines in exports to the U.S. and elsewhere.
  
  Thailand's data underscored the worst fears. The country's economy - Southeast Asia's second-biggest - contracted 4.3% in the fourth quarter compared to the same period a year earlier, considerably worse than analysts expected. The government slashed its forecast for 2009 growth to between 0% and -1.0%, from earlier projections of 3.0% to 4.0%, meaning Thailand will almost certainly endure a recession this year. The Thai economy "will be likely to get worse" before it gets better as exports stay weak, says Sriyan Pietersz, an analyst at JPMorgan Chase & Co. (JPM) in Bangkok.
  
  Southeast Asia had until recently looked somewhat stronger than the rest of Asia and many other emerging markets. Its governments built up huge reserves in the wake of the 1997-98 Asian financial crisis. Many local companies and consumers, burned by sharp currency devaluations in the late 1990s, avoided the excessive foreign borrowing and other risks that are now plaguing Eastern Europe and other regions.
  
  Two of the region's economies - Indonesia and the Philippines - are still performing better than most emerging nations, largely because they have large consumer markets that are offsetting declines in export revenues. Both countries posted growth in excess of 4% in the fourth quarter.
  
  But Indonesia faces further fallout from swooning prices for copper, palm oil and other key commodity exports, and the Philippines is counting on remittances from foreign-based workers to keep domestic spending high, even though a weaker global economy could trim those funds.
  
  The area's other big players are looking more and more like Taiwan and Korea, whose economies have already been sent into tailspins by their excessive reliance on exports.
  
  In Malaysia, a major hub of electronics manufacturing, growth was at 6.7% as recently as the second quarter of 2008. Now, analysts are forecasting only slight growth for the fourth quarter of 2008 and an outright contraction of -0.5% or worse for 2009.
  
  Auto sales fell 17.5% in January from a year earlier. In Singapore, the government said last week that non-oil exports fell 35% on-year to $6.6 billion, its worst performance since records began thirty years ago.
  
  The city-state is now bracing for an economic contraction of between 2% and 5% in 2009, according to the government. The economy has only done this badly once before, in 2001, when the U.S. tech slump led to a 2.4% fall in Singapore's gross domestic product. "There is no escape. We're going to go through a major downturn," says Manu Bhaskaran, an adjunct fellow at Singapore's Institute of Policy Studies.
  
  At Singapore's huge port, one of the world's largest, hundreds of ships can be seen from downtown Singapore, idling just offshore with no cargo to transport. Guy Lamb, managing director of Singapore-based Island Shipbrokers, which charters oil tankers, says the company has maintained its volumes but rates have fallen 75% since a peak at the beginning of 2008.
  
  Property prices, fueled in recent years by foreign demand, are also in free-fall, A report by Credit Suisse Group (CS) in January found that 200,000 foreigners could leave Singapore over the next two years as they lose their jobs in services and manufacturing. Property prices, already down 8% from their peak in 2008, could fall by as much as 40% this year, Credit Suisse warned.
  
  Singapore-based Chartered Semiconductor Manufacturing (C27.SG), one of the world's largest chip makers, said last month that it was firing 600 workers amid forecasts of its biggest ever loss in the first quarter. As job losses increase, the government announced a $13.6 billion stimulus package in January, which cut corporate taxes, subsidized wages and guaranteed bank loans.
  
  Other Southeast Asian nations have announced their own stimulus plans. Still, without a turnaround in global demand to restore export growth, such measures are likely to have only limited impact, economists say.
  
  Malaysia is now planning a second stimulus program that may be more than four times as large as its initial effort, according to media reports, and economists believe other Southeast Asian nations will follow suit.
  
  In Thailand, some analysts noted that the recent contraction reflected one-time losses from November and December, when anti-government protesters shut down the country's main airport and blocked tourist arrivals. But Pietersz at JPMorgan argued the key culprit was a nearly 10% drop in exports in the quarter. That problem accelerated in January, when exports tumbled 26.5% from a year earlier. Thai officials have said manufacturers could cut as many as 1,000,000 jobs this year as exports fade.
  
  "There's no sign of deceleration" in the export decline in Thailand, or anywhere else in Southeast Asia, Pietersz said.