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Invest during an Asian Economic Slowdown
Recently Japanese economic growth came in at half the expected strength. Chinese production is down. The European debt crisis holds the possibility that a Greek financial collapse will lead to bankruptcy of economies across the Euro Zone southern tier. Considering that a lot of money has followed growth in Asia the next question seems to be where to invest during an Asian economic slowdown? Australia has prospered as a supplier of raw materials to the voracious Chinese industrial machine. But, what about now that a Chinese real estate bubble, diminished industrial production, and a weaken economy in Europe threaten the integrity of Chinese growth? Where you want to invest during an Asian economic slowdown may not be Australia, unless you think you can pick up cheap stocks before an Asian recovery.
How about Japan?
Is it time to invest in Japan? The growth rate in Japan has fallen off but Japan is still on the mend from the worst earthquake and tsunami in its recorded history. As Japan mends its electric grid and other aspects of its infrastructure will there be further jobs and profits in that picture? If you are looking for a country with room to improve Japan could be where to invest during an Asian economic slowdown. Another aspect of Japan is that the increasingly wealthy and costly Japanese economy has led to outsourcing by Japanese manufacturers. On one hand this means that jobs throughout other nations in Asia may suffer in the short term. This would hurt economies in countries like Indonesia. But, looking for bargains during an Asian downturn could be profitable and a country like Indonesia could be were to invest during an Asian economic downturn.
The Source of the Trouble in Asia: Europe
When thinking where to invest during an Asian economic downturn investors may wish to think outside of the box. In this case that means thinking outside of Asia. China’s biggest customer has been Europe. As the European Union struggles with massive debt unemployment has risen to 25% in some countries. Rates are even higher among young workers. Unemployment leads to lower consumption as well as reduced imports. This is bad for Asian exporters as well as for the struggling economies of Europe. However, a major factor in the rise of Asia and the massive European debt has been the strength of the Euro versus Asian currencies. A longer term, and healthy, result of the European debt crisis may be a devalued Euro and a strengthening if European exports. Where to invest during an Asian economic slowdown may well be Europe in expectation of an economic rally on the continent. A combination of economic stimulus and Euro devaluation could drive up the price of Asian products to the point that European companies no longer outsource and keep their business and jobs at home. The end of Euro Zone austerity measures could be the beginning on an economic rally.