Exports from India and other Asian countries were down in July despite hopes of a trade revival. The latest data suggests the region’s export weakness is lingering.
Indian exports in July dropped 6.84 percent year-on-year to US$21.69 billion. Non-petroleum exports crashed 4.46 percent. Indian shipments fell to the United States (-6.57 percent), Japan (-1.80 percent) and China (-5.49 percent). However, shipments rose to the European Union (+1.37 percent), according to Trading Economics.
In rest of Asia, barring Malaysia and Thailand that showed some strength in June, the trade looks downcast. In June, Malaysian exports jumped 3.4 percent vis a vis a year earlier while merchandise shipments from Thailand gained 1.9 percent. Barring the two, exports of others declined more than 10 percent.
Trade continues to shrink in the face of sluggish global growth, lower commodity prices and weaker demand from China. “There is hardly any room for cheer,” according to Taimur Baig, a Singapore-based Deutsche Bank AG economist.
Baig told Bloomberg: “Substantial recoveries in price and demand, both for commodities and electronics/machinery, are necessary for regional exports to return to trend levels, an outcome that is very unlikely.”
Singapore’s non-oil exports dropped 10.6 percent in July. Japan shipments fell 14 percent in the period, the Philippines exports declined 11.4 percent in June. Thailand’s July exports showed a 4.4 percent contraction.
Malaysian and Indonesian merchandise exports in the first half of 2016 were down more than 20 percent compared with two years ago. On H1 basis, China, and Thailand, with declines of average 5 percent were the best performers, while exports from Singapore and Japan were down 10 percent.
China posted a double-digit export contraction on 2015, according to estimates from Australia & New Zealand Banking Group. It said the UK’s decision to leave the European Union and a global rise in protectionism are threats to the trade outlook while in Japan the stronger yen is hurting the economy.
Credit Suisse said global growth will remain lackluster next year at 2.6 percent compared with an estimated 2.4 percent in 2016.
Regarding the prospect of a revival in trade, a rebound in private capital expenditure across the world is essential. But that is showing little sign and Brexit ripples are yet to fully unfold. “Therefore any bounce from trade will prove short-lived,” noted Frederic Neumann, an economist with HSBC Holdings, Hong Kong.