C17002 Connects Name Strap AsiaExport

Our economists shared their views on Asia’s export cycle with the media on Friday, April 29, highlighting the impressive recovery but also why it could be short-lived. This podcast is a compilation of four of our economists’ overviews – see below for the individual time stamps.

Rob Subbaraman

00:00 - 08:52

Euben Paracuelles

08:53 - 15:30

Young Sun Kwon

15:31 - 19:06

Wee Choon Teo

19:07 - 24:52

Asian ex-Japan (AEJ) exports (USD value) have been experiencing a V-shaped recovery since Q4 2016, and our analysts’ leading indicators suggest this upswing will continue at least through May 2017. These factors raise two key questions for the region: 1) what is driving the current export recovery; and 2) will it last? In this report, our analysts answer these questions and assess their implications for Asian economies.

Our economists’ analysis shows that the recent export recovery was driven by both higher volumes and price effects. The volume uptick was led by increased Asian exports to China of both electronics and commodities. While China’s commodity demand was driven by restocking, the electronics upcycle was underpinned by Chinese smartphone demand and inventory restocking. Higher memory and commodity prices (price effects) also played a role. Thus, the recent export recovery appears to have been largely driven by cyclical factors.

Overall, our analysts expect AEJ export growth to remain strong in Q2 2017, supported by a favorable base effect from export prices and China’s solid growth. However, they also expect AEJ’s export growth to start a gradual moderation in H2 2017 on base effects and slowing China demand. They see risks of a more pronounced export slowdown in 2018, which is when they expect the electronics cycle to turn decisively lower and Chinese GDP growth to ease. A likely increase in protectionist policies from the US would provide an additional headwind.

Read the full report here, for more FX and Rates strategy insights, as well as detailed analysis on the V-shaped rebound of Asian exports, the multiple drivers of this rebound, why the upcycle is likely to be short-lived and country-specific analysis on China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea and Thailand.

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