We are at that time of the year when countries publish their GDP growth rates for the third quarter. Some have already made these numbers public while we are still waiting for several others to do so in the following days. Most likely ten days from now we will see the list of developed countries that are already going through a technical recession grow. Germany, France and Italy are all candidates in this category. And in Asia Japan is also at risk of entering into this group. But when we think about the rest of the Asian continent, we tend to think that growth is still strong, even though at this time it is probably clear that no country or region will be immune to the slowdown that the world economy is going through.

Growth rate in China in the third quarter of 2008 was 9%, down from 10.1% in the second quarter. This is the weakest growth rate in China in five years, but it is still a very healthy level. China has been one of the first countries to make this estimate available. We are waiting for the data for other Asian countries, although there is a general expectation that growth rates will be lower than for the second quarter of 2008. India will probably decrease from the 7.9% growth of the previous quarter, and something similar will happen with South Korea (4.8%), Taiwan (4.3%) or Thailand (5.3%).

However, there are already some countries that show a quite different path. In particular Hong Kong and Singapore. In Hong Kong the second quarter showed a decrease of GDP in relation to the end of the first quarter, and Singapore is already in a recession. Data for the third quarter showed a decrease of -0.5% that comes on top of negative growth in the second quarter. So it would be misleading to think that Asia is not starting to feel the effects of the crisis in the developed world. If we only look at the growth rates of China, India and some of the other larger countries, it may seem that the impact is limited, but this is not the case if we look at some of the smaller countries. And this is not surprising. Hong Kong and Singapore are very vulnerable to what happens in the more developed world because their external sector represent a significantly larger proportion of its GDP than in other countries. But if the world economy continues its current trajectory towards lower growth rates it may well be the case that more countries in the region will get closer to a recession “danger zone”.