SINGAPORE (Mar 29): A weakening trend in Chinese import demand and slower global trade will continue to weigh heavily on exports across Asia, according to Oxford Economics.
“We expect exports to remain under pressure this year from weak Chinese demand and slower global trade, as well as the slowdown in the ICT (information and communications technology) cycle,” the group says in a report on Friday.
It notes that nominal export growth fell 3.8% y-o-y in the first two months of the year, which was primarily driven by a sharp fall in North Asian exports.
“Chinese good exports fell sharply, dropping 20.7% on the year,” Oxford Economics says. “Meanwhile, we estimate that on average Chinese import volumes fell 7.2% y-o-y in the first two months combined, after a decline of 1.6% in 4Q18.”
However, it adds that growth among South East Asian economies was also very weak.
While Oxford Economics acknowledges that trade data is usually volatile in the first quarter due to the timing of Chinese New Year, it says the weak start to 2019 adds to its view that regional central banks will keep rates on hold this year.
It adds that India and the Philippines could also reverse some of last year’s tightening.
“Moreover, the slowdown in the ICT cycle continued to weigh heavily on trade growth among key electronics exporters such as Japan, Taiwan, South Korea and Singapore,” Oxford Economics says. “Indonesia has also not been immune to the slowdown in external demand with weak manufacturing underpinning an overall slowdown in good export volumes.”