Outlook for Asian-Pacific Exports Remains Positive

Outlook for Asian-Pacific Exports Remains Positive

Most market analysts are in agreement with the idea that each of the world’s four largest economies will finish 2014 in positive territory.  If these projections prove accurate, global growth could rise to as much as 3.3% for the year, and bring improvements for the world trade outlook as well.  To gain some perspective, containerized trade made up one of the weakest elements 2013’s global economic performance, coming in at 2.1% for the year.  But if import demand in developed markets is strong enough to support the outlook for export companies in emerging Asia, these numbers could more than double (to 4.7%) this year.

Trends in Emerging Asia

“Most industrial economies in Asia have a high share of GDP contributions from exports,” said Haris Constantinou, markets analyst at TeleTrade.  “Some of the lesser-often-discussed examples in this space can be seen in Singapore, Malaysia, Thailand, and South Korea.”  So, it is important that we see strength in export markets if we can reasonably expect positive GDP performances for 2013.  Currently, we are seeing an improved outlook in this space, and this should continue to be one of the main drivers of growth for the region.

Most of the attention tends to center on China, however, as export growth has been the main driver of GDP gains for more than two decades.  The expected upturn in the US and Eurozone supports the outlook here as well, as these regions make up key end markets for China’s manufacturing companies.  Positive transmission effects continue to ripple through the world supply chain, and this will continue to support small and medium enterprises in China.  Furthermore, continued government spending on large-scale infrastructure, urban development, and transportation networks, strengthen the case for the successful construction of China’s planned investment program to develop its “smart cities.”

Medium Term Trends

Looking at Asia’s biggest economies over the medium term, there are two key trends that deserve attention.  First, we are seeing sustainable growth in consumer spending (aided by the rapid increases in household discretionary income).  Second, we are seeing consistent rates of urbanization, with 300 million more people expected to live in metropolitan areas in the next 15 years.  China is currently the second largest economy in the world, with market analysts expecting growth rates of more than 8% for this year and next year.  These expectations rely largely on China’s position as a central outlet for exporters in the Asia-Pacific region. 

Exports from members of the Association of Southeast Asian Nations (ASEAN) to China have increased at an average yearly rate of 20% for the last decade, and the strongly interconnected relationship that marks ASEAN-China bilateral trade trade agreements will continue to exist as a central growth for both regions.  It will be important to watch the global trends as well, as the level of interconnectivity that continues to characterize these economies essentially suggests that the success of one will depend largely on the other.  In any case, analyst forecasts for 2014 continue to show improvement -- with little on the wake to suggest downturns in coming months.