Economic News From UOB Kay Hian Securities (Thailand) Pcl.
Exports and Production Data Still Weak
Asia?s exports data to May continue to show substantial declines, which is not surprising given the extent of headline growth contractions seen in key markets such as US and Europe. On average, Asia?s exports declined 24%y/y in Apr-May vs. 24.6%y/y in 1Q09.
Manufacturing sector in Asia has fared better/?less bad? over the past few months, likely to be due to inventory rebuilding activities and in response to demand from China which has helped buffer some of the declines in Asia?s exports.
China?s imports have indeed picked up from the trough in January as its fiscal stimulus package turns into demand. Given the rising share of China?s demand, Korea, Taiwan, Japan and most of Southeast Asia have benefited from the increased demand.
However, final demand from key consumer countries remains the main factor in Asia?s growth recovery story. This means that Asia?s exports remain on track for at least a 10-20% contraction this year. We are still expecting headline growth declines in key Asian exporters (Singapore: -7.5%; South Korea: -3.0%; Malaysia: -4.0%; and Taiwan: -5.2%), before returning to positive growth in 2010.