Export volumes in ASEAN under pressure
Export is no longer the growth engine for certain ASEAN nations, the UK-based Centre for Economics and Business Research (CEBR) said in its recent Economic Insight – South East Asia report, produced together with global accountants organisation ICAEW.
The report says that rising oil prices, inflationary pressures, a Chinese property bubble and the ongoing European sovereign debt crisis were all taking their toll on ASEAN economies, although they continue to grow, but at a slower pace.
Focusing on the six large economies of ASEAN, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, the report says that there are also large differences between the countries with export dependence is rising for some while it is falling for others.
At 207.7 per cent of GDP, the value of Singapore’s exports is the second-highest in the world after Hong Kong. Both cities owe their enormous trade levels to large ports and their status as regional trading hubs. Export volumes in relation to output fell as trade plummeted during the global financial crisis and currently stands at about the level of 2003. This is expected to pick up again, rising gradually to 216 per cent of GDP and will thus remain lower than during the pre-crisis peak as local incomes rise and the domestic markets strengthens.
Indonesia, the Philippines and Malaysia – together accounting for six in ten of the region’s population – are projected to have stable export shares of GDP near the 2011 level in the coming three years. Within this group, Malaysia is most exposed to the vagaries of external demand due to its export-GDP ratio near 100 per cent of GDP, whereas Indonesia and the Philippines stand closer to 30 per cent. These numbers show that GDP growth at least in these countries is much less dependent on the global economy, allowing for steady growth through a period of weak external demand.
Thailand and Vietnam are climbing the ladder of exporters as they develop their manufacturing bases. Vietnam is becoming attractive for makers of labour intensive products due to rising wages in neighbouring China. Its rising connectedness into the global supply chain is evident in a near-tripling of exports as a proportion of GDP over the past decade, from 32.8 per cent in 1995 to a projected 93.3 per cent in 2014, by which time it will nearly equal Malaysia on this measure. Thailand’s exports are only set to grow from 2014 onwards since the recent flood damage set its expansion back.
Meanwhile, the Kasikorn Research Center (KResearch) in Thailand said that Thai exporters should prepare backup plans even though the debt crisis in the euro zone is expected to have less effect on the Thai economy than on others in ASEAN.
Thai exports to EU markets shrank by 15.4 per cent in the first four months. The euro-zone crisis remains a big risk factor whose effects could spread to other countries, KResearch said.
The uncertainty in the euro zone will lead the Bank of Thailand to maintain its policy rate through the end of the year. The central bank has also lower the export growth forecast for Thailand from 9.3 per cent to eight per cent due to the EU debt crisis.
[caption id="attachment_3461" align="alignleft" width="300" caption="Export products of ASEAN countries are increasingly exposed to global economic volatilities"][/caption] Export is no longer the growth engine for certain ASEAN nations, the UK-based Centre for Economics and Business Research (CEBR) said in its recent Economic Insight - South East Asia report, produced together with global accountants organisation ICAEW. The report says that rising oil prices, inflationary pressures, a Chinese property bubble and the ongoing European sovereign debt crisis were all taking their toll on ASEAN economies, although they continue to grow, but at a slower pace. Focusing on the six large economies of ASEAN,...
Export is no longer the growth engine for certain ASEAN nations, the UK-based Centre for Economics and Business Research (CEBR) said in its recent Economic Insight – South East Asia report, produced together with global accountants organisation ICAEW.
The report says that rising oil prices, inflationary pressures, a Chinese property bubble and the ongoing European sovereign debt crisis were all taking their toll on ASEAN economies, although they continue to grow, but at a slower pace.
Focusing on the six large economies of ASEAN, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, the report says that there are also large differences between the countries with export dependence is rising for some while it is falling for others.
At 207.7 per cent of GDP, the value of Singapore’s exports is the second-highest in the world after Hong Kong. Both cities owe their enormous trade levels to large ports and their status as regional trading hubs. Export volumes in relation to output fell as trade plummeted during the global financial crisis and currently stands at about the level of 2003. This is expected to pick up again, rising gradually to 216 per cent of GDP and will thus remain lower than during the pre-crisis peak as local incomes rise and the domestic markets strengthens.
Indonesia, the Philippines and Malaysia – together accounting for six in ten of the region’s population – are projected to have stable export shares of GDP near the 2011 level in the coming three years. Within this group, Malaysia is most exposed to the vagaries of external demand due to its export-GDP ratio near 100 per cent of GDP, whereas Indonesia and the Philippines stand closer to 30 per cent. These numbers show that GDP growth at least in these countries is much less dependent on the global economy, allowing for steady growth through a period of weak external demand.
Thailand and Vietnam are climbing the ladder of exporters as they develop their manufacturing bases. Vietnam is becoming attractive for makers of labour intensive products due to rising wages in neighbouring China. Its rising connectedness into the global supply chain is evident in a near-tripling of exports as a proportion of GDP over the past decade, from 32.8 per cent in 1995 to a projected 93.3 per cent in 2014, by which time it will nearly equal Malaysia on this measure. Thailand’s exports are only set to grow from 2014 onwards since the recent flood damage set its expansion back.
Meanwhile, the Kasikorn Research Center (KResearch) in Thailand said that Thai exporters should prepare backup plans even though the debt crisis in the euro zone is expected to have less effect on the Thai economy than on others in ASEAN.
Thai exports to EU markets shrank by 15.4 per cent in the first four months. The euro-zone crisis remains a big risk factor whose effects could spread to other countries, KResearch said.
The uncertainty in the euro zone will lead the Bank of Thailand to maintain its policy rate through the end of the year. The central bank has also lower the export growth forecast for Thailand from 9.3 per cent to eight per cent due to the EU debt crisis.
