Hong Kong - Japan on Wednesday posted a record trade deficit and Hong Kong said its economy would shrink by up to 3% in 2009 as recession woes deepened across Asia.
US President Barack Obama meanwhile unveiled plans to help pull the world's biggest economy out of recession, but admitted the government would have to spend even more to save the country's troubled banks and ailing auto companies.
Japan's recession woes showed no signs of abating as the finance ministry announced the trade deficit had ballooned in January to ¥952.6bn - the worst month since records began 30 years ago.
Exports plummeted 45.7% from a year earlier, highlighting how Asia's largest economy has been left exposed during the slowdown due to its heavy reliance on foreign demand for its cars, high-tech products and other goods.
"Because of the shrinking global economy, Japan's business model of being dependent on exports is not working at all," said Barclays Capital chief Japan economist Kyohei Morita.
Japan's top automakers Toyota, Honda and Nissan - which have already been forced to cut thousands of jobs - said on Wednesday they had also sharply reduced production in January to counter the slump in global car sales.
'Once-in-a-century financial turmoil'
Toyota, the world number one, said its global output had fallen 42.6% in January from a year earlier. Nissan reported a 54.0% plunge while Honda logged a 33.5% drop.
Japan, the world's second largest economy after the United States, is now in its worst recession in decades, after contracting at an annualised pace of 12.7% in the last quarter of 2008 - the worst figure in almost 35 years.
Its recovery from recession in the 1990s was thanks in large part to the strength of its exports, but falling global consumer spending and a strong yen have left exporters struggling to compete.
The news was no better from Hong Kong, where the city's financial secretary said the economy would shrink by 2% to 3% in 2009 - the first annual contraction since the Asian financial crisis more than a decade ago.
"This once-in-a-century financial turmoil has spread from the financial markets to the real economy, leading to a synchronised global recession," John Tsang told lawmakers.
"Being a small, open economy, Hong Kong will inevitably be hit by the turmoil."
The southern Chinese city first tumbled into recession in the third quarter of 2008, and the situation worsened in the final quarter, with GDP shrinking 2.5% year-on-year, Tsang said.
Obama reassures Americans
Hong Kong is still sitting on $488bn in fiscal reserves, which many analysts had expected Tsang to use to stimulate the economy, but he resisted, instead focusing on job creation and salary tax cuts.
The job situation in Singapore looked increasingly bleak, with a study by local bank DBS showing that up to 99 000 jobs could be lost in the city-state before the crisis is over due to decreased demand for exports.
Taiwan, which is also dependent on foreign demand for its goods, saw exports plunge 41.67% to $17.68bn in January, the biggest fall since 1984. Industrial output fell a record 43.11% in January from a year earlier, the government said on Tuesday.
And in Indonesia, Southeast Asia's largest economy, parliament approved a $6bn stimulus package of tax incentives, government spending and subsidies to stave off further fallout from the global crisis.
In Washington, President Obama tried to reassure Americans that the economy would survive the recession, saying that further spending on top of the trillions of dollars already set aside might be needed to bail out US banks.
The banks fell victim to mass defaults on so-called subprime mortgage loans - made to people with weaker credit histories that were repackaged and sold to banks and investors around the world.
The defaults set off a global chain reaction that left banks saddled with piles of toxic assets leaving growth at a standstill, with many consumers unable to borrow money.
Obama announced a new lending fund aimed at small business owners and students, saying that without a plan to kickstart lending, "our recovery will be choked off before it even begins."
"You see, the flow of credit is the lifeblood of our economy," he told lawmakers.
Obama's speech cheered investors in Japan, where share prices closed up 2.65%. Hong Kong stocks were up 0.7% after the morning session.
- AFP