Trade war curbs imports in S-E Asia

SINGAPORE: A slump in Southeast Asian exports amid a worsening United States-China trade war is having a knock-on effect on imports.

Given the high import content of manufactured goods, purchases from abroad have slid along with the plunge in exports from four emerging Southeast Asian economies and South Korea.

That, in turn, would cut investment and growth in those countries, said Reza Siregar and Yuanliu Hu, economists at the Institute of International Finance (IIF), in a research note.

The hardest-hit will be South Korea and Thailand, where capital imports have dropped the most.

Growth in those economies could weaken this year to 2.1 and 3.4 per cent, respectively, said the economists.

Besides South Korea and Thailand, the IIF included Indonesia, Malaysia and the Philippines in its analysis. The Philippines is the only country in the group where both export and import volumes have increased.

Weaker import growth would result in stronger current account positions this year, most notably in Thailand and Malaysia, said the IIF.

“The risks for further growth slowdowns remain, especially if cutbacks in investment persist.”

Oxford Economics Ltd has also lowered its growth forecast for Southeast Asia amid escalating trade tensions. The region’s economy could weaken to 4.8 per cent this year and 4.7 per cent next year from 5.3 per cent last year, said Sian Fenner, Oxford’s lead Asia economist in a note.

Singapore, Malaysia, and Thailand were most exposed to global trade in a region that had particularly high export orientation and strong trade integration with China, she said.