Asia Pacific export recovery hinges on advanced economies

The rebound in economic growth in advanced economies in North America and Europe due to the rapid rollout of vaccination programs in the first half is expected to improve export orders from the Asia-Pacific, according to market intelligence company IHS Markit.

In a report, IHS Markit said key export destinations such as the US, UK, and Canada have been aggressive in their inoculation programs to stomp out COVID-19.

Merchandise exports in Asia-Pacific are forecast to register a strong rebound of 9.4 percent this year after contracting three percent last year.

IHS Markit estimates that global trade volume contracted by 11.2 percent in 2020, but can recover by 7.5 percent and 4.1 percent in 2021 and 2022, respectively.

“The central case global economic scenario for 2021 is positive, with the world economy forecast to show improving momentum through the course of 2021 as COVID-19 vaccination programs are rolled out,” said Rajiv Biswas, Asia Pacific Chief economist.

“Many of the world’s largest economies, including the US, EU, Japan, China and India are expected to be rapidly progressing with vaccination programs during the first half,”Biswas said.

This should allow domestic demand to strengthen in these nations as lockdown restrictions are eased.

The electronics sector is expected to sustain its recovery which began in the second half of 2020.

This industry is an important part of the manufacturing export sector for many ASEAN economies, including Malaysia, Singapore, the Philippines, Thailand and Vietnam.

Furthermore, the electronics supply chain is highly integrated across different economies, with China being an important supplier of intermediate electronics parts for a number of Southeast Asian electronics sectors.

“The electronics sector rebound is making an important contribution to the recovery of manufacturing exports and industrial production in many ASEAN industrial economies,” Biswas said.

Over the medium-term, Asia-Pacific exports are also expected to grow at a rapid pace, helped by the sustained growth of intra-regional trade, as China, India and the ASEAN continue to be among the world’s fastest-growing emerging markets.