As we head to the last half of August, many countries have now published economic figures for the first half of 2011 ending June 30th.

Back in May I looked at World GDP growth and not surprisingly found that the Asia/Pacific region was leading the world.

In fact, the region was compensating for lackluster growth in Europe and the US. Two weeks ago, I looked at slowing manufacturing around the globe for July signaling a possible economic slowdown for the second half of 2011.

After poor manufacturing reports around the globe, the last two weeks of news from the US and Europe has included some stomach churning results. World financial markets have looked like a rollercoaster ride at an amusement park. Consumer confidence in the 70% consumer driven US economy fell to lowest reading ever since 1980. Even lower than during the depths of Global Financial Crisis in 2008 and 2009!!! Consumers shutting their wallets was a driving factor combined with a housing market collapse that sent the US economy a cliff in late 2008 and early 2009.

If consumer confidence is lower now, what does that foretell for the rest of 2011?

In Europe, the debt crisis that started last summer in Greece had spread to Portugal and Ireland by the beginning of this summer. All three being relatively small economies in the European Union. Over the past couple of weeks symptoms have spread to Italy and Spain, the 3rd and 4th largest economies in the EU. On top of that, French banks are reported to have great exposure to Italian and Spanish debt. France is the 2nd largest economy in the EU.

Many Asian economies derive a lot of their growth from exporting to large EU and US markets. Post financial crisis I have written much about these economies growing without much growth in the EU or US. The question now becomes will these economies be able to stay on the growth side if the EU and US return to periods of economic contraction? First half Asia GDP data shows that growth is slowing with a couple of key Asian economies close to contracting or contracting.

What is the first half picture in Asia?

Those marked in red are economies that slowed in the 2nd quarter from the 1st quarter, which is most. Indonesia and Japan showed no change. Japan of course continues to try to rebound from its March disasters. The two glaring examples are Singapore and India, with Singapore’s economy slowing to almost a complete halt. At the depths of the Global Financial Crisis Singapore’s economy contracted by -8.40%.

Seeing export dependant Singapore and India slow down considerably is a disturbing sign for the 2nd half of 2011. US GDP has been anemic in the first half with growth accelerating slightly from .8% in the 1st quarter to 1.3% in the 2nd quarter. Europe is expected to report that it moving the other way going from .8% in the 1st quarter down to .3% in the 2nd quarter. At this moment Vietnam and China are still doing well. The 2nd half of 2011 may show if the Asian economies have decoupled themselves enough from the US and Europe.


By: Matt Flax - Senior Business Advisor at DragonGate.Asia