Current Affairs in Asia & its Impact on Global Economy

For last few weeks Asia has been the center of attraction for all wrong reasons.
First among it is the revolutions in the middle east and North African  countires like Tunisia,Libiya and Eygpt.It all began in Tunisia when Mohamed Bouazizi,a young Tunisian street vendor who lit himself in flames in protest of economic conditions and police mistreatment. His self-immolation marked the beginning of the 2010–2011 Tunisian protests,which then spread across the Eygpt and Libiya.Mohamed Bouazizi is now named the father of the Tunisian revolution.He died on January 4, 2011 due to the burn wounds resulting in massive street protests throughout the country, eventually leading to the downfall of the Tunisian strongman Zine El Abidine Ben Ali.

In the long-run, a freer Middle East and North Africa would be an unqualified boon for the global economy, and for the citizens of those countries most of all. In the short-term, however, uncertainty is contributing to market volatility.  Egypt is a far more populous country than Libya. But Libya has nearly ten times more oil than Egypt. And so unrest is contributing to a rising oil price. Brent crude jumped about 3% to nearly $106 per barrel today, and West Texas Intermediate is up just over 6%. Set against the world historical events taking place in Libyan streets, these seem like petty concerns, but for consumers around the world (and embattled central banks) rising oil prices could mean trouble.

Of course, prices rose during the Egyptian protests only to fall back as it became clear that Mr Mubarak would depart without significant civil unrest. The same thing could happen this time around. But as the popular uprising gains momentum and moves across borders, bigger issues may loom. Iran is home to a restive opposition movement—and over 10% of the world’s proven oil reserves. And if China were to catch the fever for democracy? It’s difficult to know how that might impact the global economy. China makes up a much larger share of global activity than it did in 1989.

Amid all the uncertainty, one thing does seem clear: events have a way of building on themselves. The combination of high unemployment and rising commodity prices has fueled dissatisfaction across the Middle East. The resulting unrest is influencing commodity prices. And that, in turn, may make life more difficult for marginal households in other countries, setting the stage for still more political upheaval.

 

Libiya Concerns World

Libya continues to create turbulence in crude oil prices soared. In recent weeks, oil prices on the world’s two main stock stabilized above U.S. $ 105 per barrel.

• According to news agency Associated Press, oil prices for the transaction of April in New York trading , up U.S. $ 1.02 to U.S. $ 105.44 per barrel. Price even had time to touch U.S. $ 107 per barrel – the highest since 26 September 2008. 

• On the London stock exchange, oil prices fell 93 percent to U.S. $ 115.05 per barrel. 

• The high price of crude oil, according to the observer, as investors continue to regard the situation in Libya, one of the major crude oil producer in the world. 

• Since February 15 last upheaval occurred in Libya, thus making the country’s oil exports halted. Thus, market participants warned that the global oil supply levels will continue to pressure for months.

 

                          Tsunami Again in Japan                                                                                      

                                                                                      

The Killer waves once  again rocked the Pacific ocean when a massive 8.9/9.0 magnitude earthquake hit the Pacific Ocean nearby Northeastern Japan at around 2:46pm on March 11 (JST) causing damage with blackouts, fire and tsunami.The waves rose upto 30 meters heigh and destroyed almost anything that stood in its path.Over 10,000 people are dead and the economic or property loss has not been finalised.This is a major blow not only for Japan but also the world economic growth as Japan was one of the heavily industrialized Countries.

To add to the misery there are also  confirmed reports  about nuclear radiation leak from the reactors in Japan which was affected during the earthquake.

 

• Japanese auto makers and other factories extended closures for several more days at least, potentially imperiling deliveries of everything from Prius hybrid cars to the flash chips that go into iPhones and iPads. Taiwan’s EVA Airways said it will cancel 56 flights between Japan and Taiwan, including some through the end of June—and saw its share price nosedive 6.9%.

• Tens of thousands of tourists have canceled trips to and from Japan, while regional rubber-industry leaders called a special meeting likely to be held later this week to try to arrest a sharp drop in rubber prices amid expectations of weaker demand in Japan. 

• Markets fell across Asia, led by an 11% drop of Tokyo shares following a 6.2% fall Monday, the worst performance of the Nikkei since its Oct. 16, 2008, drop of 11.4% during the global financial crisis. Some $364 billion of investor wealth, or 9.4% of the Tokyo Stock Exchange’s market capitalization, was wiped out, with begin declines in shares of Tokyo Electric Power Co., or Tepco, which dropped 25%, and Toshiba Corp., which fell 20%.

• Hong Kong’s Hang Seng Index tumbled 2.9%, and stocks also fell in China, Australia, Taiwan and South Korea, among others.
• Economists stressed that if Japanese officials are able to bring its nuclear problems under control, it should help the country move more quickly into full recovery mode, lifting some of the worries. Growth overall is still expected to be strong in Asia this year, though a number of analysts have said in recent days they may have to ratchet down their forecasts as headwinds multiply.

• Even though serious damage was limited to a few areas, Japan’s problems are nationwide because supplier logistics have been severely dislocated by restrictions on using highways for freight, as well as unpredictable power cuts that make operations planning extremely difficult. Meanwhile, the shadow of the ongoing nuclear crisis is making many companies reluctant to ask staff to report for work until the situation clears.

 

                                                             A postive note at the end
Some economists and companies continued to see silver linings in the disaster, however tragic it was.

• Executives at India’s Essar Steel Ltd. and state-run Steel Authority of India Ltd. said Tuesday they expect exports of finished steel to Japan to climb in the coming months as the country rebuilds and owners of wooden buildings along Japan’s coastline replace them with sturdier structures. 

•  Thailand’s Thai Union Frozen Products PCL, the world’s biggest canned-tuna producer by sales, said Tuesday it expects increased sales to Japan as the country looks for alternative food sources following damage to areas with seafood processing.

  

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