North Asian exporters flash warning lights for the region

Timely October trade data from North Asia are flashing warning signs that Asia’s export downturn is gathering momentum. We think exports from elsewhere in Asia are likely to follow a similar trend, as they have in the past.

What you will learn:

• Electronics exports, especially semiconductors, are leading the slowdown. And with the global chip market having turned and likely to stay on a weaker path well into next year, we expect further declines. Most other goods are showing signs of softness too.
• After recently making major downgrades to our export forecasts across the region, the latest downbeat data have added to our conviction that we are in the midst of an export pullback that will last well into 2023. Key export partners, the US and Eurozone, are slipping toward recession. What’s more, the composition of demand is changing, with consumers reverting to spending more on domestic services at the expense of foreign goods. We doubt any revival in Chinese demand would offset these factors.
• The return of tourists should mitigate the slump in goods exports over the coming quarters, as tourism recoveries get into full swing in a region that has been late to re-open. But this is unlikely to be anywhere near large enough to stop the pace of overall exports declining sharply.