January 3, 2008
BEIJING (Reuters) – Factories in China and India joined much of Europe in slashing output and jobs at a record pace in December, another sign the biggest emerging markets were wilting under the recession gripping industrialized nations.
Factory activity surveys in the United States were also expected to show a steeper contraction in December, as demand collapses in the Western countries that developing nations rely on as export markets.
Economists and policymakers had seen China, Russia, India and Brazil, with their vast markets and rising wealth, as the engines of growth that could save the world from recession. Those hopes are fading fast and forecasts are getting gloomier.
From job loses at Chinese factories to the biggest drop in South Korean house prices in five years, there were signs the export slowdown was rippling through domestic economies in emerging markets.
“What is worrying is that the weakness has spread rapidly from the externally-oriented sectors to domestically oriented sectors too,” analysts at OCBC Bank in Singapore said in a note after the country announced gross domestic product data.