Gloomy outlook for Asia trade as growth slows: Poll

Gloomy outlook for Asia trade as growth slows: Poll

SINGAPORE (Reuters): Asia's trade position is worsening as the
healthy export driven surpluses built up in the post crisis era
are eroded by the global economic slowdown and soft domestic
demand, the latest Reuters regional poll showed.

Even where surpluses are growing, the news is not good.

As exports dwindle, rising trade surpluses are sometimes
coming mainly through a drop-off in imports. This can either mean
domestic demand is slowing or worse, that exporters are not
importing the raw materials or components they need to fuel the
export drive.

The findings of the trade poll gelled with this week's Reuters
GDP poll which forecast lower external and internal demand than
previously expected for many regional economies.

South Korea is a good example of how a growing external
surplus is not economic good news. Exports are falling because of
the global slowdown but imports are falling faster given low
domestic demand not only by consumers for finished goods but by
manufacturers for raw materials to produce exports.

"We expect to see a bounce in both exports and imports in the
fourth quarter on a year-on-year basis," said Huh Chan-guk of the
Korea Economic Research Institute.

"But for the year, the pattern would be that the import
slowdown is more pronounced than the export slowdown."

Forecasts were fairly wide ranging but the average was for a
trade surplus of $16.1 billion this year, well up on the $13.4
billion forecast in a similar survey in March.

Taiwan is in a similar position with imports declining faster
than exports amid a slowdown in private investment.

"Imports will slide this year even more than exports as
private investment turns cautious amid an economic slowdown that
is more serious than expected," said Chung Hsing Securities
economist Hermes Yang.

Taiwan's trade surplus is seen at $9.6 billion in 2001, up
from the $8.9 billion forecast in the March survey.

The slowdown in the U.S. and Japan is bad news given the heavy
reliance of regional exporters on these two markets.

The poll forecast Thailand's annual trade surplus would narrow
to about $2.96 billion in 2001, from about $4.01 billion forecast
three months ago.

The U.S. and Japan together take about 36 percent of Thai
exports, which in turn account for about 65 percent of GDP.

The Philippines is similarly reliant on these two markets as
well as the moribund electronic components market, which makes up
around half of the country's total merchandise exports. The U.S.
takes about a third of Philippine exports while Japan takes less
than a fifth.

The 2001 surplus is seen at $6.15 billion, although forecasts
were wide-ranging.

Singapore and Malaysia are in the same boat with their export
performance suffering at the hands of the global slowdown and in
particular demand for electronic goods.

"New orders for electronic products are now contracting at a
more drastic pace than at any time in the last 25 years and that
suggests we are going to see a horrendous performance for
electronic exports in the next six months," said P.K. Basu of
Credit Suisse First Boston, speaking specifically about
Singapore.

China's trade surplus is seen narrowing this year to $16.6
billion from $24.1 billion last year and the $17.2 billion
surplus forecast in the poll three months ago.

The surplus is expected to narrow this year and next year due
to weakening export growth as the global economy slows and
imports are boosted by massive infrastructure construction and
lowered import tariffs.