Yup, nothing says relaxation to me quite like all of the ‘HORROR! DOOM! CRISIS!’ stories that beseech us all to be afraid – be very afraid – of the world around us.
In today’s edition of let’s make an already shitty thing substantially worse comes the news that big chunks of the planet that seemed to have escaped the financial crisis are now succumbing to recession in style. Yay! Those of us who’d hoped to manufacture and export our way out of a double (triple?) dip recession now have no customers left. Double yay!
Europe’s inability to afford imports is beginning to have an impact on territories previously thought to be largely unaffected. One of the worst-hit countries has been Japan: not only have they had to deal with the aftermath of last year’s earthquake/tsunami/Fukushima triple threat, which obviously had a dramatic effect on manufacturing output, but exports to the European Union are down a mammoth 25.1 percent.
And while the Japanese had hoped that Europe’s shortfall would be made up by an increase in exports to China, sales to their near neighbour have fallen by 11.9 percent over the course of the past year.
China is supposed to be the big economic success of the 21st century, but those analysts who have kept a careful eye on the earth’s most populous country have long been suspicious of the economic claims being made by Beijing. The country supplies its own figures with regard to manufacturing output, imports and exports, and the like. Those figures are difficult to verify, and have been viewed with increasing incredulity over the past decade.
One statistic that is externally measurable – and which casts doubt on the financial figures provided by Beijing – is China’s use of power. In an era when the Chinese government has been adamant that the country is growing, and growing quickly, China’s kilowatt hours spent months in decline. That is not in keeping with the publicised levels of growth.
Kilowatt hours have since stabilised, but China’s manufacturing index fell yesterday, with new business and new export orders both down to levels last seen in 2009, during the early stages of the financial crisis. In addition, China’s manufacturing output index is falling, and their output index is low.
Combine China’s drop in power usage with its drop in imports and the implication is that the Chinese economy is contracting, even if the government currently says otherwise.
And a contracting Chinese economy will spell trouble world-wide. Recent years have seen a lot of Chinese money funnelled into Australia, and to a certain extent that investment has helped insulate the country from the worst of the financial crisis. South Africa is another country to have deep economic ties with China; the two have traded goods and technology for years, and are currently involved in a number of sizeable energy projects.
Brazil is at particular risk because of its growing dependence on China. Over the past decade, the South American country has seen a significant decline in manufacturing, and is now reliant on its role as a supplier of raw materials to China. As China’s economy contracts, so too will Brazil be affected.
But while a weakening China will obviously have a domino effect around the world, such is the economic might of the Asian giant, a number of its regional neighbours are also suffering the effects of the current economic situation: in the first two weeks of August, South Korea’s exports were down 12.4 percent on the same period in 2011, leading to a sizeable trade deficit.
So why all this focus on the economy? It struck me that the list of countries currently in something of a financial predicament – and the list of those on their way into trouble – shares an awful lot of entries with the list of countries on the F1 calendar.
Now, I am not positing any sort of causal link between hosting a grand prix and a struggling domestic economy. Far from it. Rather, I wonder to what extent those races will be at risk should the global economy plunge deeper into recession, prompting governments to refine their list of priorities.