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.