BELARUS NEWS AND ANALYSIS
DATE:
23/10/2008
Crisis hits Japan exports, IMF to talk to Belarus
By Jason Subler and Keith Weir
BEIJING/LONDON (Reuters) - Weak Japanese exports illustrated on Thursday the damage to major economies from the global financial crisis as the IMF said it would open loan talks with Belarus, the latest developing market casualty.
New Zealand's central bank lowered interest rates by a record one percentage point and said further reductions were in the pipeline, following a round of coordinated cuts by major central banks earlier this month.
Japanese exports grew only 1.5 percent in September from a year earlier, well short of forecasts, prompting worries that the world's second-biggest economy is heading into recession and renewing speculation of an interest rate cut by the Bank of Japan (BOJ).
More worryingly, shipments to the United States fell for the 13th straight month and exports to the European Union recorded a fourth annual decline in five months.
Many economists say the effects on business of the financial crisis set off by a U.S. housing market collapse 15 months ago are only starting to show, even as money markets start to thaw as banks begin lending to each other again.
"Clearly, in spite of the fact that the global banking system was saved by government recapitalization and guarantees, crisis in the real economy is still deepening and will have to play out in several quarters of negative growth," Dariusz Kowalczyk with CFC Seymour in Hong Kong said in a research note.
Asian stocks fell to a 4-year low on growing fears emerging market weakness will prolong a global recession and depress corporate earnings, pushing the yen to a 6-year high against the euro.
The carnage in Asian markets followed a fall of U.S. stocks to a five-year low, hit by weak corporate earnings reports and job cuts. Shares in Europe were trading around 0.5 percent lower in early dealings.
Authorities around the world have committed nearly $4 trillion in a variety of schemes including deposit and debt guarantees and taking stakes in struggling banks, to restore confidence after the most severe financial upheaval since the 1930s Great Depression.
Leaders of the world's major industrial nations and big emerging economies like China, India and Brazil will discuss the crisis at a special summit on November 15 in the United States.
IMF HELP
The crisis is ensnaring a growing number of countries, which are turning to the International Monetary Fund (IMF) for help.
Pakistan, which has requested financial assistance from the IMF to help it through a balance-of-payments crisis, said it had approved a fund worth nearly $250 million to support share prices once a floor imposed two months ago is removed on Monday.
In addition to Pakistan, the IMF is also expected to help Iceland, driven close to bankruptcy by bank failures, as well as potentially Hungary, Belarus and Ukraine.
"It's not that the fundamentals for emerging markets have changed. Capital is now moving back from the emerging world to the developed world," said Neil Dougall, chief emerging markets economist at Dresdner Kleinwort.
IMF Managing Director Dominique Strauss-Kahn said an IMF staff mission would begin discussions with the authorities in former Soviet Belarus within the next few days but the amount of funding still had to be determined.
"The global financial crisis has adversely affected the Belarus economy and its access to external finance," Strauss-Kahn said. "At the same time, changing conditions in trade have negatively affected the country's balance of payments," he said.
(Reporting by Reuters bureaux worldwide; Editing by Mike Peacock)
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