Macro Insights Weekly: Assessing the soft patch in Asia’s exports
- There have been two distinct soft patches for Asian exports in the past year
- N Asian exporters of electronics and industrial products saw orders fall sharply from early-2022
- The second, less severe, patch has been among Asean economies from mid-22 onward
- Scanning regional PMI surveys, only exporters out of S Korea and Vietnam look very bearish
- Given the post-pandemic surge in exports, ongoing slowdown is hardly alarming
Commentary: Asia’s exports soft patch
There have been two distinct soft patches for Asian exports in the past year. Starting in early 2022, North Asian exporters of high-end electronics and industrial products began to see waning exports orders after exceptionally strong demand during the pandemic years. The weakness was an early warning of a major downturn among big-tech corporations, which spent 2022 calibrating to customers’- worldwide slowing their purchases of PCs, gaming devices, and e-services.
The second, less severe patch has been among Asean economies. Malaysia and Indonesia have seen the effect of some decline in commodity prices in recent months, but overall, they have been on a strong footing. Electronics exporters in this part of the world have also begun to see some weakness in demand. Ongoing exports contraction in China and Hong Kong SAR, in our view, stems from pandemic related disruptions.
Scanning regional PMI surveys, only exporters out of S Korea and Vietnam look very bearish; the rest are slightly below or above 50. The ongoing soft patch does not seem particularly alarming from their survey perspective.
The pandemic related lockdowns caused a lot of gyration in the year-on-year figures. A clearer picture emerges when we chart the level of export earnings in USD, and set 2016=100. Two key takeaways are (i) exports were rather lackluster pre-pandemic and (ii) post-pandemic rebound has been stellar from China, India, Malaysia, Indonesia, Taiwan, and Vietnam, with exports 60-100% higher in 2022 compared 2016. Ongoing correction in exports should be seen in that context, without major concern.
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