Asian slump

The news from Asia today is pretty gloomy.

AFP/CNA reports the latest BoJ forecasts.

Japan's economy faces a two-year recession, the central bank warned Thursday as it unveiled new measures to repair battered credit markets by mopping up risky assets.

The world's second biggest economy is expected to contract by 1.8 per cent in the current financial year to March and by 2.0 per cent the following year, the Bank of Japan said, downgrading its earlier outlook.

The Bank left its key interest rate unchanged at 0.1 per cent, as expected, while announcing fresh steps aimed at unblocking credit flows.

The BoJ said it would spend up to three trillion yen (US$33.7 billion) to buy commercial paper, a type of short-term corporate debt, to make it easier for companies to secure vital credit during the recession.

Earlier, Japan had reported that exports plunged in December.

Japan reported Thursday a record 35 per cent plunge in exports in December as consumers worldwide tightened their belts, pushing Asia's biggest economy even deeper into recession.

Demand for Japanese goods plummeted, prompting warnings from analysts that the economy may have contracted 10 per cent on an annualised basis in the fourth quarter of 2008 - the worst performance in three decades.

Japan's neighbours look to be in bad shape too.

China's economy slowed sharply in the final quarter of 2008 to just 6.8 per cent as thousands of factories that sold to overseas markets shut, pulling the full-year growth figure down to 9.0 per cent, official data showed.

South Korea said its economy was in the worst shape since the East Asian financial crisis a decade ago, following a 5.6-per-cent contraction quarter-on-quarter in the final three months of last year...

Singapore reported on Wednesday it was facing its worst-ever recession after the economy contracted by 16.9 per cent in the final quarter, its biggest fall on record.