Asia's high imports buck predictions<\/p>\n
By James T. Areddy<\/p>\n
HONG KONG (Dow Jones): Thailand's imports rose at twice the
\npace of exports last year, challenging the notion that an export-
\nled recovery has taken hold.<\/p>\n
Raising a similar doubt, Indonesian exports actually fell a
\nlittle in 1999, even despite a doubling in the price of its key
\nnatural resource, oil.<\/p>\n
These figures confound conventional wisdom that the crisis-hit
\ncountries of Asia are relying on an export renaissance to fuel a
\nreturn to growth. The numbers also support a growing view that
\nthe trade surpluses built during 1998 will erode as the
\neconomies, confidence and currencies strengthen again.<\/p>\n
\"All (of Asia's) trade surpluses will narrow in 2000,\" said
\nKevin Ng, an economist at ABN-Amro Asia Ltd. in Singapore. He
\nfigures the Philippines is even headed toward a small trade
\ndeficit this year.<\/p>\n
Trade numbers reported Monday in Thailand and Indonesia -- the
\ntwo nations that most defined the Asian economic collapse along
\nwith South Korea -- served to temper enthusiasm that the entire
\nregion is enjoying an unbridled export boom.<\/p>\n
The boom, in fact, is largely electronics related. The
\nPhilippines, which announced on Tuesday an almost 19 percent
\ngrowth in exports last year, has been a clear beneficiary of that
\ntrade. (Its 1999 import numbers are due to be released mid-
\nmonth.)<\/p>\n
However, Thailand and Indonesia feature lower-end value-added
\nmanufacturing, and neither is an electronics-industry powerhouse.<\/p>\n
Indonesia's lagging trade performance is a reflection of the
\noverall weak economic conditions there, so its experience may be
\nunique. Analysts expect 2000 to be the first year it chalks up a
\nfull-year of positive growth since the upheaval that has wracked
\nit since 1997 erupted.<\/p>\n
And granted, Thailand's 18 percent year-on-year surge in
\nimports during 1999 very importantly underscored an improvement
\nin the confidence of businesspeople and consumers. After the
\ncountry's 1997 devaluation wiped out buying power and the 1998
\nrecession drove up local unemployment, Thailand has a natural
\nlevel of pent-up demand for imports.<\/p>\n
\"Last year you had nothing, this year you have something,\" Ng
\nsaid.<\/p>\n
The danger is that since its exports only grew by 7.2 percent
\nin 1999, Thailand's only two-year-old trade surplus is threatened
\nwith quick evaporation if the trends continue at the current
\npace.<\/p>\n
If that happens, markets might sell-down on a \"knee-jerk
\nreaction that Asia could be going back to where it was before the
\ncrisis,\" said Eddie Lee, regional economist at Vickers Ballas
\nHoldings Ltd. \"But I suspect in the medium term that shouldn't be
\na worry. There is sufficient buffer still.\"<\/p>\n
Thailand's full-year surplus amounted to US$8.89 billion, down
\nabout 27 percent from 1998, but imports were rising at three-
\ntimes the rate of exports in the latter months of the year. Plus,
\nthe currency is strengthening as economic conditions improve.<\/p>\n
Even in Asia's recovery leader, South Korea, imports grew
\nfaster than exports in 1999, and will do so again this year. The
\ngovernment sees exports up 8.9 percent in 2000, yet predicts
\nimports will jump 20 percent.<\/p>\n
Thailand's surging imports look particularly ominous since the
\nnation virtually ate, drank and spent its way into the 1997
\ncrisis. Its appetite for imported luxury foods, cognac and cars
\nled to a $16.1 billion trade deficit in 1996, equal to 8.9
\npercent of gross domestic product.<\/p>\n
A Bank of Thailand official sought to play up the positive
\naspects of last year's rise in imports by explaining Monday that
\nmanufacturers were buying more raw materials overseas to feed
\nbusy production lines gearing up to export finished product. The
\ncentral bank cited more manufacturing in the car, car-part, iron
\nand steel industries.<\/p>\n
\"If that is the explanation, then we should see exports and
\nimports pick up together,\" commented ABN-Amro's Ng. \"It may be
\npart of the reason, but it is not the whole reason.\"<\/p>\n
The central bank official, Atchana Waiquamdee, who heads the
\neconomic research department, did express worry that a trade
\ndeficit could return in 2001. But industry, not connoisseurs or
\nsports-car enthusiasts, will drive the demand, she pointed out.<\/p>\n
Vickers Ballas' Lee agreed. \"You're not seeing the same kind
\nof spending on high-end goods as in the past,\" he said, although
\nhe does see signs of increased spending on big-ticket items.<\/p>\n
Atchana noted that the nation's trade surplus of around $440
\nmillion last year helped underpin a $1.91 billion balance of
\npayments surplus. Year-end foreign reserves stood at $34.8
\nbillion, equivalent to 8.7 months of imports, the central bank
\nnoted.<\/p>\n
In its forecasts, SG Securities Research Ltd. agrees there
\nwill be a continued erosion in the trade surplus of Thailand and
\nother Asian countries through 2002.<\/p>\n
However, its analysts see Thailand flush with \"a large pool of
\nprecautionary savings\" accumulated in the financial crisis. And
\nconsumer spending will only provide an adjunct to an economy
\ndriven mostly by manufactured exports.<\/p>\n
Commenting on the full set of October trade numbers, SG said
\nin a report that despite a 32 percent import jump year-on-year,
\nthe 19 percent rise in exports is more notable because it marked
\nthe first time exports topped $5.0 billion a month since the
\ncrisis.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/asias-high-imports-buck-predictions-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}