Finance news

South Korean exports tumbled by a record in January and Chinese manufacturing contracted as the global recession sent growth sliding in export-driven economies across Asia.

South Korea’s shipments fell 32.8 percent from a year earlier, the Ministry of Knowledge Economy said. Manufacturing in China shrank for a sixth month, the CLSA China Purchasing Managers’ Index showed.

Plunging export demand is dragging down economies across Asia and the Pacific, where Japan and Hong Kong are already in recessions and Taiwan, South Korea and Australia are getting closer. South Korean steelmaker Posco will extend production cuts and Rio Tinto Group, the biggest iron-ore miner in Australia, may sell shares to raise cash after commodity prices plummeted.

“Things are getting worse as the global recession spills over to China and other emerging economies,” said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul.

Japan’s factory output slumped by a record in December from November, the government said last week, and Australia’s manufacturing contracted for an eighth month in January, a report showed today. Australia faces a “collapse in government revenues,” according to Prime Minister Kevin Rudd, as the global and domestic economies slow.

The MSCI Asia-Pacific Index fell 2.1 percent as of 4:10 p.m. in Tokyo, extending its decline to 9 percent this year.

Worst on Record

South Korea’s shipments fell by the most since figures were first compiled in 1957, and at almost twice the pace of December’s decline. The trade report is among the region’s first economic releases for January.

“An outright recession is inevitable,” said Kwon Young Sun, an economist at Nomura International Ltd. in Hong Kong. “This is an early indicator for the region, and the drop suggests exports in Asia won’t be good free credit score.”

The Chinese purchasing managers’ index rose to a seasonally adjusted 42.2 from 41.2 in December, CLSA Asia-Pacific Markets said today. A reading below 50 shows a contraction.

The Chinese economy will “likely get much worse before getting better,” said Wang Qing, Hong Kong-based chief China economist at Morgan Stanley.

Chinese manufacturers shed jobs last month at the fastest pace since the index began in 2004, the CLSA survey showed.

About 20 million migrant workers have lost their jobs because of the nation’s economic slowdown, Chen Xiwen, a senior rural planning official said at a briefing in Beijing today.

Boosting Growth

China is considering extra measures to boost growth, Premier Wen Jiabao said in an interview with the Financial Times, published today. While declining to explicitly rule out a devaluation of the yuan, he said that the government intended to keep the currency stable at a balanced and reasonable level.

Policy makers have stalled gains against the dollar since mid-July and U.S. Treasury Secretary Timothy Geithner said last month that President Barack Obama believes China is “manipulating its currency.”

The nation is rolling out a 4 trillion yuan ($585 billion) economic stimulus package. It has also lowered its key lending rate five times since September, pressured state-owned banks to increase lending, reduced export taxes and agreed to provide support for 10 industries, from steel to autos.

China’s exports fell by the most since 1999 in December and economic growth cooled to 6.8 percent in the fourth quarter, the weakest pace in seven years, from 9 percent in the third.

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