SINGAPORE (June 28): The recent US-China trade tension escalations have resulted in the deterioration of the manufacturing and exports sector – causing Oxford Economics to lower its GDP growth forecasts across most of Asia.
Most countries recorded negative export growth with the exception of China (up 1.1%) and India (up 3.9%).
Vietnam’s goods exports were also up a solid 9.5% on the year, as exports to the US have accelerated, likely reflecting some trade diversion due to the US-China trade war. This has partly offset weaker demand from China and the region.
Oxford's lead Asia economist Sian Fenner says, “With commodity prices lower in May, we estimate that China’s export volumes expanded 2.8% y/y in May (vs. 1.5% y/y decline in April), implying an improvement in sequential momentum. However, the improvement in Chinese exports was not mirrored elsewhere.”
Falling electronics exports also underpinned the largest fall in Singapore non-oil domestic exports (down 16.1% from 2018) since early 2013.
Looking ahead, the renewed tensions are set to add further downward pressure on global trade and regional exports and growth.
“While the US and China are likely to agree to a temporary truce following the G20 meeting, and not raise tariffs further, we do not believe think the existing tariffs will be lifted any time soon,” shares Sian.
Intraregional trade is also showing signs of being hurt by slower Chinese import demand and increased protectionism.
