Electronics crunch may hit Asian economies' exports

Electronics crunch may hit Asian economies' exports

SINGAPORE (Reuter): The heady days of double-digit export
growth may be over for Asia's booming economies, at least for
this year, as the global electronics crunch bites.

"This is a trend throughout Asia because of the dominance of
electronics in many countries' export markets," said Desmond
Supple, an economist with the I.D.E.A think-tank in Singapore.

Already, the Korea Institute for Industrial Economics and
Trade (KIET) predicts South Korea's export growth will slow to
11.3 percent this year after a 30.3 percent rise in 1995, before
recovering to 13.5 percent next year.

"The slowdown in the technology sector in the U.S. and Europe
is a major factor depressing the nation's exports," said KIET's
Shin Hyun-soo. "The falling demand in the high-tech sectors such
as computers dealt a deadly blow to South Korea's semiconductor
exports," Shin said.

Semiconductors account for about 18 percent of South Korea's
exports.

In Singapore, non-oil exports in June were down 6.1 percent,
the first drop in more than three years. Economists said that was
a sign of worse to come for 1996, primarily because of the
downturn in electronics exports to the United States and the
European Union (EC).

They then scrambled to pare down gross domestic product (GDP)
projections for Singapore, where electronics make up about 60
percent of non-oil domestic exports.

Another Asian Tiger, Hong Kong, will release June export data
this week and analysts are expecting softer numbers.

"There will be substantial weakness in the June figures, I
understand," said Ian Perkin, economist at the Hong Kong Chamber
of Commerce.

In the first five months of the year, Hong Kong exports were
up 6.4 percent at HK$541.3 billion.

"That's very slow growth for Hong Kong. There is a level of
concern about the slow growth of trade this year," Perkin said.

Malaysia saw its electronics exports contract in June by 6.1
percent month-on-month against growth of nine percent in the
previous month and a 14 percent rise in April.

It is the world's largest exporter of packaged and assembled
semiconductors, which were 22.4 percent of total manufactured
exports of 147.5 billion ringgit (US$59.24 billion) last year.

Thailand

Thailand has lowered its export growth target for this year to
14 percent from 18 percent. Some government ministers are not
confident even the new target will be reached after export growth
in the first half of this year of only eight percent.

Economists said the duller Asian export picture for 1996 was
due largely to surplus electronics stocks in the United States
and excess production capacity in Asia, which expanded in 1995 to
meet projections for strong U.S. demand.

Last year, Asian electronics exports soared. So this year's
export growth is being measured off a high base, they said.

But they said there was light at the end of the tunnel,
because much of the downturn is cyclical and does not mark a
serious setback to Asia's robust growth pattern.

"The region's export growth will decline to single digits at
some point towards the end of the year, but is unlikely to remain
there for an extended period," an HG Asia report said.

Economists said an expected recovery in U.S. book-to-bill
orders by the third quarter of this year should mean an upturn in
Asia is on the cards by early 1997 and policymakers are unlikely
to be under too much pressure.

"In terms of policy response, it's an external demand
condition. They aren't going to be as pressured as they should be
if it was a slowdown in competitiveness or productivity," Supple
of I.D.E.A. said.