Big chill reaches Asian banks

January 22, 2009

http://www.vancouversun.com/Business/chill+reaches+Asian+banks/1205489/story.html

This article talks about the fear which had stricken the Asian banks, vastly due to the Global Recession. Through the Recession, Asian banks are now facing escalating loan losses and a fall in profitability as the economic activity in the region struggle to come to grip with the rapid slowdown in global trade. In the current situation, banks throughout Asia are now being hampered by bad debt charges and now are forced to raise additional capital to shore up their balance sheets. According to Fitch Ratings Ltd. some of the countries that will be hit the hardest is going to be Taiwan, South Korea, Hong Kong, India and China. According to analyst David Marshall "The forecasts look harsh but could end up seeming optimistic later in the year if Asia's economies suffer deeper than expected downturns," which basically implies that the economy this year will certainly not have any drastic changes in terms of improving, so everyone can only hope right now that the economy will rebound next year. Besides Asia Pacific index dropping down by13% this year, shares in China's biggest bank, Industrial and Commercial Bank of China, have slipped down to 4.6% yesterday, while shares in China Construction Bank dropped 3.8%. Most economists right now are predicting that China's GDP growth will slip below the 8% mark and with China's current economy continuing to decline, the GDP of China's neighbour like Taiwan and Singapore are also in a decline.

Connections to Introduction

The connection I make with this article and chapter 4 has to do with the term gross domestic product (GDP), because according to the text, GDP is the value of all the goods and services produced in a given year. This directly relates to this article since this article basically explains about how the economic activity in Asia is in sudden turmoil. With almost all the economic power house in Asia suffering from the global recession, the best way right now for economist to grade how much a countries economy have declined from previous year is to use GDP. Basically, the best way to truly understand how much a countries economy have dropped is to basically look into a countries GDP because the GDP is a reflection that tells everyone how much a countries goods and services have been doing this past year. This is simply why GDP links directly into my article because overall, this whole article is basically proving the importance of the GDP. If the Asian countries were to have successful economic growth this year, then the GDP would have risen upward, but since the economic stature is currently in total turmoil, the GDP shows that the most powerful Asian countries are in absolute chaos right now.

Reflection

Personally, i think it's really a shame to see how not only Asian countries, but every country in the world today is being hampered hard by the global recession. Unfortunately, economist have even said that the economy will not be improving this year, so everyone can only cross their fingers and wish that things will improve next year. With GDP for every country declining from previous years, we can truly see how much this recession have taken its toll on every country. I think this is what makes the GDP so significant because through the GDP, we can see which countries have taken the worst hits and which countries are still hanging by the tips of their fingers. Luckily, with the Vancouver 2010 Olympics next year, Vancouver economy should be back in the right directions and hopefully things would get better next year.