SINGAPORE (Sept 11): Asian economic growth is set to accelerate. After a long period of patchy and unconvincing recovery, there are signs that the global rebound is gaining enough traction to be a durable one. Better still, this upward lift is supporting higher export growth in Asia. More encouragingly, domestic engines of growth also seem to be regaining some vigour. Overall, this means that the regional economies have more buffers and so could be more resilient against political or other shocks that financial markets are currently worried about.

Global demand offering more durable boost to Asian exports
The data released in the past couple of weeks has been strikingly positive. In the US, the manufacturing sector is at its most vigorous since 2011, judging by the Purchasing Managers’ Index. Global semiconductor sales are expanding at their fastest rate since 2010. In Europe, French business confidence is at its highest level since April 2011 and German business confidence is close to a record high. That is why bank lending in the eurozone is recovering, with Germany leading the way — businesses are more confident about the future and are borrowing to expand, which suggests that the rebound will continue. Even in Britain, where concerns over the impact of Brexit are growing, the fall in sterling has boosted exports — surveys show the proportion of companies reporting booming export orders at a record high.

Encouragingly, this global recovery is now feeding more palpably into Asian export growth. Korean exports — a bellwether for global demand — grew by an average of around 18% in July-August. Malaysia just reported that exports in July surged 31%. Better still, the brighter prospects for exports are translating into stronger industrial production. In Singapore, industrial production soared 21% in July, one of the highest growth rates the country has enjoyed in five years. Growth appears to have continued into August when Singapore’s Purchasing Managers’ Index reached its highest level in three years while the electronics index has not seen such high levels since November 2010. In Malaysia, surveys of purchasing managers show that higher export demand has boosted optimism among manufacturers to its highest level since December 2013.

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