STRUNG OUT ON ASIAN IMPORTS
A sharp drop may belt the West
What happens when the tail in the global economy stops wagging the dog? That's the question raised by a striking development: the sharp slowdown in developing Asia's imports, which are now running just slightly above year-earlier levels after soaring by 23%, to nearly $1 trillion in 1995.
In the traditional view of global economic cycles, it's the industrialized countries that lead the way, with the export-dependent developing nations following in their wake. In recent years, however, trade flows have shifted dramatically. The developing nations' balance of merchandise trade with the industrial world swung from a modest surplus at the end of the 1980s to a record deficit of $142 billion last year.
One result, notes a recent International Monetary Fund study, was a "significant structural break" in the economic relationship between the two groups in the early 1990s. Specifically, instead of mirroring the slowdown in the industrial nations, growth in the developing world--particularly in Asia--accelerated sharply. And that pickup not only helped to limit the slowdown in industrial nations but also has also contributed to their recent recoveries.
Now, however, warns economist Joseph Quinlan at Dean Witter Reynolds Inc., the opposite pattern may be unfolding. A variety of problems--ranging from current account deficits and infrastructure bottlenecks to exchange-rate pressures and fears of overheating--caused a number of Pacific Rim nations to step on the brakes. As a result, intraregional trade has slumped (almost 40% of exports are to other Asian nations), compounding the problem of slack demand from the West. And import growth has slowed even more dramatically.
It's the deceleration in imports in the face of a slowing U.S. economy and sluggish European and Japanese recoveries that has Quinlan worried. Developing Asia now accounts for close to a fifth of total world imports and, based on last year's numbers, some 20% of U.S. exports and over 40% of Japan's exports. Already the IMF reports that the combined trade surplus of 22 industrial nations fell from $14.9 billion in the first half of last year to just $200 million in the first half of this year.
"Considering Asia's huge appetite for imports," says Quinlan, "we may be at a point where if Asia sneezes, the industrialized nations catch cold."BY GENE KORETZReturn to top
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FEWER AT THE CHARITY BALL
Economic worries inhibit givers
The economic anxieties that continue to afflict many Americans are affecting their charitable giving. According to a nationwide survey by the Independent Sector, a group representing some 800 voluntary organizations, only 68.5% of households made monetary gifts in 1995, the smallest percentage since the organization began sponsoring such surveys nearly a decade ago.
Nearly three-quarters of surveyed households said they were worried about having enough money in the future--a percentage that has risen steadily since 1988. Since households in this group (and poorer households in general) tend to make fewer contributions than families with no financial worries, the decline in the incidence of giving was not surprising.
Still, total household charitable contributions did rise by 8% in nominal terms and 2% in real terms between 1993 and 1995--as many middle class and affluent households boosted their individual gifts. Almost 90% of those with household incomes above $100,000, for example, made charitable contributions, averaging 3.4% of their incomes. (By contrast, the 47% of households in the lowest income class--under $10,000--that made contributions gave an average 4.3% of their incomes.)
Affluent givers, of course, were able to make use of tax deductions--an advantage of no value to poorer households.BY GENE KORETZReturn to top