Download ITOCHU Corporation

ITOCHU Corporation
2009 BIAC Business Roundtable
Global economic growth:
How deep will it fall and when will it bounce back?
Sumitaka FUJITA
ITOCHU Corporation
May 21, 2009
ITOCHU Corporation
Figure 1
Japan’s industrial production has fallen sharply
（Index, 2005 average=100)
120
110.1
（Feb 2008）
110
100
90
80
70.6
（Mar 2009）
70
60
2003
2004
2005
2006
2007
2008
2009
(note: seasonal adjusted)
(source: Ministry of Economy, Trade and Industry)
1
ITOCHU Corporation
Negative economic growth continues
Figure 2
（change from previous quater、％）
10
Japan's Real GDP Growth
6.1
5
4.4
3.4 2.8
1.4
2.72.7
2.3
2.9
4.0
0.6
3.1
1.5
3.0
3.4
4.3
2.1
4.0
1.4
0.4
1.4
0
-1.7
-1.1
-1.1
-1.3
-5
-1.4
-4.5
-10
-12.1
-15
2002
2003
2004
2005
2006
2007
2008
（4Q）
(note:seasonal adjusted, annual rate)
(source: Cabinet offiece, government of Japan)
2
ITOCHU Corporation
Our main scenario

for economy of Japan and Asia
How deep will it fall?
□ Industrial production has fallen two-thirds from its peak a year ago.
□ Negative economic growth for three quarters since the 2Q of 2008

When will it bounce back?
□ Likely to hit the bottom during the 1Q and 2Q of 2009
□ Start to recover from the 3Q of 2009
⇒ but moderate recovery
3
ITOCHU Corporation
Background
1) End of the sharp falls in exports of Asian countries
◇ The sharp falls in global demand for automotives and housing investments
have come to an end.
◇ The steady progress of inventory adjustment in Western economies
2) Positive effects of economic stimulus packages
3) Losses from bad loans in Asia are smaller than those in West
◇ The negative impact on demand in Asian countries from reluctance by banks to
extend new loans is not as severe as it is in Western countries.
4
ITOCHU Corporation
Background
1) End of the sharp falls in exports of Asian countries
◇ The sharp falls in global demand for automotives and housing investments
have come to an end.
◇ The steady progress of inventory adjustment in Western economies
2) Positive effects of economic stimulus packages
3) Losses from bad loans in Asia are smaller than those in West
◇ The negative impact on demand in Asian countries from reluctance by banks to
extend new loans is not as severe as it is in Western countries.
5
ITOCHU Corporation
End of the sharp falls in exports
Figure 3
（trillion yen）
90
（billion US$）
1,600
Japan
China
1,400
80
1,200
1,000
70
800
60
600
400
50
200
40
2000
02
04
06
08
10
0
2000
02
04
06
08
10
（note: seasonal adjusted, annual rate)
(Sources: Ministry of Finance Japan, National Bureau of Statistics of China)
6
ITOCHU Corporation
Background
1) End of the sharp falls in exports of Asian countries
◇ The sharp falls in global demand for automotives and housing investments
have come to an end.
◇ The steady progress of inventory adjustment in Western economies
2) Positive effects of economic stimulus packages
3) Losses from bad loans in Asia are smaller than those in West
◇ The negative impact on demand in Asian countries from reluctance by banks to
extend new loans is not as severe as it is in Western countries.
7
ITOCHU Corporation
Figure 4
Economic stimulus packages
Additional Fiscal
Ratio for nominal
Expenditure
GDP
（bil US$）
（％）
1 United States
787
5.5
2 China
654
7.2
(EU)
260
1.5
3 Japan
263
5.3
4 South Africa
156
10.0
5 Germany
105
3.2
6 Brazil
66
4.8
7 France
50
1.3
8 Australia
42
5.2
9 Canada
32
2.6
10 Portugal
32
3.4
11 United Kingdom
32
1.5
12 India
26
2.4
13 Spain
14
1.1
14 Singapore
14
8.0
15 Italy
12
0.6
・
・
・
・
・
・
・
・
・
World total
2,588
3.3
（note: all countries as of Feb 27 except Japan. Japan's figure is reported on Apr 10)
8
ITOCHU Corporation
Figure 5
Car sales is bottoming out
（Million Units）
80
74.5
(Jan 2008)
World total
75
70
65
60
55
60.1
(Feb 2009)
50
45
40
1990
95
2000
05
10
（note: seasonal adjusted, annual rate)
(Sources: The statistics document of each country)
9
ITOCHU Corporation
Background
1) End of the sharp falls in exports of Asian countries
◇ The sharp falls in global demand for automotives and housing investments
have come to an end.
◇ The steady progress of inventory adjustment in Western economies
2) Positive effects of economic stimulus packages
3) Losses from bad loans in Asia are smaller than those in West
◇ The negative impact on demand in Asian countries from reluctance by banks to
extend new loans is not as severe as it is in Western countries.
10
ITOCHU Corporation
Figure 6 Amount of reported write-downs of Financial Institutions
（billion US$）
Reported writedowns of
Amount of raising
Financial
capital (actual) government
public issue/
Institutions
/parent company private placement
World total
1,182
1,010
426
584
United States
810
571
165
406
Europe
341
370
164
207
69
1
68
Asia
30
（note: from Oct 1 of 2006 to Mar 3 of 2009)
（Source: The Bank of Japan)
11
ITOCHU Corporation
Other points
1) Asian economy to be decoupled from West
◇ The housing bubble in Asia is much smaller than that in West
◇ The enormous potential demand in China and India
2) Economy of Japan
(Concerns)
◇ Sluggish consumer spending
due to excessive wage restraint and decreasing population
(Positive elements)
◇ Unexpectedly early economic recovery ?
due to early capital spending adjustment
12