Asian export growth drops for various reasons

Asian export growth drops for various reasons

HONG KONG (AFP): Asian economies are beginning to feel the
effects of a drop in export growth, despite estimates which would
be the envy of any western finance minister.

The reasons for the export downturn -- or hiccup as some
analysts say -- are varied, including rising wages, a production
glut, and a corresponding fall in overseas markets, especially in
Europe and the United States.

Another problem affecting the balance of payments is the
increasing imports into the region as it grows wealthier.

The common denominator, in the cyclical trading world, is
business success, which is beginning to present its own problems.

The figures in themselves are, in most cases, still
impressive. Thailand, for example, has scaled back its 1996
target for export growth from 18 percent to 14 percent due to a
sharp drop in imports by its traditional partners.

Japan, well into its slump but showing signs of getting out,
will see exports rise 3.5 percent year-on-year in the 12 months
to March 1997, compared with a 5.7 percent increase in the year
to March 1996, according to figures from Sakura Institute of
Research.

"The present Japanese economy is a bit similar to the US
economy in the 1970s when it was shifting from export drives to
global developments," says Tokyo Research Institute economist
Toshio Sumitani.

"Lower exports due to Japanese companies' overseas production
and the economic slowdown abroad can be a restraint for the
nation's economic growth, " Sakura Institute said in the report.

The economic slowdown outside Asia is a recurring theme among
analysts throughout the region.

All Newly-Industrializing Countries (NICs) in Asia have
suffered sharp declines because of a drop in imports by their
major partners in Japan, the United States and Europe, according
to Thai Deputy Prime Minister Amnuay Virawan.

The regional swings are mirrored by industry swings.

The electronics industry, particularly semiconductors, is in a
slump at present, a major factor in many emerging and newly-
developed Asian economies.

According to investment house Crosby Securities, Singapore's
non-oil domestic export growth will slow to around nine percent
in the next two quarters, from around 13 percent, due to the
slowing demand for electronics, Singapore's chief export item.

South Korea's year-on-year export slowdown from 33.2 percent
to 11.8 percent in the first half of 1996 was also attributed in
part to a sharp drop in semiconductors prices.

It's a similar story in Malaysia, where another potential
problem is the rising ringgit, which threatens a crunch in labor
costs.

Indonesia

The twin effects of lowering demand from international markets
and a strengthening currency are also beginning to affect
Indonesia.

According to Manmindar Singh, senior economist at the Nomura
Research Institute in Singapore, Indonesia's exports began to
drop in January but "really slowed" in April and May.

"The rupiah has been very strong, so Indonesia loses compared
to other countries that export similar products," he said.

The strengthening dollar may come to the rescue, analysts say.

Taiwan is already feeling the benefit of its own currency's
losing ground against the greenback -- its exports advanced 6.4
percent year-on-year in the January-June period, while imports
declined 1.0 percent.

Taiwan and the Philippines also bucked the electronics
downward trend, with the Philippines enjoying a 47.8 percent
year-on-year surge in electronics and components shipments in
May.

For the economies emerging from decades of communist market
policies, the problems are different.

The drop in Chinese exports has been caused by the poor
showing of state-owned companies, the China Daily reported
Monday.

A spectacular drop of 25.5 percent of exports from state-owned
companies for the first five months of this year, was highlighted
by a 38.6 percent rise in exports from foreign-owned and joint-
venture firms over the same period.

Neighboring capitalist stronghold Hong Kong's figures are
bolstered by re-exports from China.

The value of re-exports rose by 3.8 percent to HK$100.3
billion (US$12.86 billion) in May. The value of domestic exports
decreased by 12 percent to HK$17.6 billion.

Vietnam's trade deficit rose 37 percent from a year earlier to
US$1.77 billion in the first six months of 1996, according to
figures released Monday by the Ministry of Trade.

Exports rose 16.5 percent over the period to $3.05 billion
while imports grew 28.9 percent to $4.82 billion, according to
the preliminary figures.

Do Quoc Sam, minister of planning and investment, has said he
is not too concerned about the trade deficit because many of the
imports were productive equipment coming in for foreign joint
ventures.

Despite the export falls, the sort of figures Asian nations
are throwing out would still be a lifeline to many an embattled
western government.

With Japan coming out of its slump, and the US economy
improving the signs are good.

There are also signs that with semiconductor demand and prices
showing signs of rebounding, the region could benefit.

The Asian party isn't over yet.