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A shrinking western demand, rising inflation and a scarcity of trade finance have resulted in a significant slump in Asian exports, putting a dampener on the festive season. While governments have tried various measures to stimulate their economies including generous stimulus packages, reducing interest rates by up to 1 percent and increasing inter-regional trade, exports have continued to decline.
Exports are the growth engine of Asia and contribute more than 46 percent of gross domestic product for the region’s main economies outside Japan. The 5-6 percent drop in demand from richer western nations has meant a significant drop in goods and services exported from Asia. As a result, not only are many Asian economies experiencing the lowest exports since the dot com bubble seven years ago, but their currencies have also nosedived. Bloomberg said eight of the region’s 10 most-traded currencies excluding the yen dropped this week as investors became net sellers of shares from South Korea, Thailand and the Philippines. 2point6billion, rounds up the fall in exports and currencies around Asia.
Asia’s fastest growing economy China reported a massive drop in exports to a little over US$100 billion, the lowest in seven years. The country’s imports also declined to US$70 billion, down from US$91.34 billion a year earlier. Similarly Taiwan’s exports also dropped 12 percent from a year earlier, the steepest drop in nearly 7 years to US$19.2 billion in November leading to the economy contracting 1.02 percent in the third quarter from a year earlier, its first drop in five years.
India’s exports too fell 12 percent in October, its first drop in seven years US$12.82 billion, the first year on year fall in nearly three years. The government has taken several initiatives over the past few months to increase consumption and boost the economy including reducing interest rates, cutting excise duties by 4 percent and more recently adding US$4.1 billion to stimulate the economy.
Falling shipments of cars and electronic goods to the U.S., E.U and rest of Asia meant that Japanese exports slid 7.3 percent to 6.59 trillion yen while imports inflated by high oil and gas costs rose 8 percent to 6.45 trillion yen. Japan which is in the midst of a recession after seven years further accounted for a balance of trade in goods and services deficit of 131.9 billion yen reversing a year-earlier surplus of 96.1 billion yen.
With a fall in textile exports which make up about 55 percent of the Vietnamese economy, and the E.U. imposing an anti-dumping ban on Vietnamese shoes, Vietnam also expects to see a downturn in their export market. The International Monetary Fund has predicted that Vietnam’s economic growth will slow to 5 percent next year, below the communist government’s 2009 target of 6.5 percent.
Politically troubled nations Thailand and India too saw drastic drops in exports. Thailand’s political crisis battered its main sectors tourism and exports. “Net exports are falling and local political turmoil is seriously deterring investment and tourism,” Ampon Kittiampol, secretary general of the state-run National Economic and Social Development Board told the AFP. The Tourism Authority of Thailand also warned analysts that it is expecting only half as many tourists next year as the 14.5 million visitors who came in 2007, due to the politically motivated airport blockade that stranded 350,000 travelers.
Following the Asian trend South Korean exports in November also declined 18.3 percent year on year to US$to 29.26 billion, the most in seven years. South Korea reported a US$13.3 billion trade shortfall during the first 11 months of the year, putting the country on course for its first yearly deficit since 1997, when it was hit by the Asian financial crisis. “The decline in exports came earlier than anticipated as the liquidity crunch triggered by the US financial crisis caused importers to reduce and cancel orders,” Chung Jae-Hwan, head of the ministry’s trade and investment bureau, told the AFP.
