Trade performance in the aftermath of the crisis

Exports from all major East Asian economies have declined shapely from the fourth quarter of 2008 (Table 7 [ PDF 15.6KB | 2 pages ], Figure 3 [ PDF 13.3KB | 1 page ] and Figure 4 [ PDF 26.3KB | 1 page ]). The absolute degree of export contraction experienced by all countries in the region in the region in the last quarter of 2008 and the first three (or four) months of 2009 was far greater than the contraction in world income during this period. The degree of export contraction (on average about 20%) is remarkably synchronous among the countries regardless of the well-documented differences among these countries in the degree of export orientation, or the degree of dependence on the US, and other developed country, market. These patterns suggest that the drying up of trade credit and traders' overreaction to a possible collapse in demand would have played a role in the total decline in trade. It is, therefore, too early to make any definitive analysis of the importance of the dependence on network trade and other related structural features of trade patterns evolved during the precrisis era for export performance following the on-set of the crisis. However a close look at data for individual countries does reveal some interesting patterns.

Among the East Asian countries Japan is by far the worst hit. Japan's exports consist of two broader product categories: capital goods and high-end durable consumer goods (mostly motor vehicles) directly exported predominantly to the US and other developed countries, and components of electronics and electrical goods exported to the PRC and other East Asian countries to be used in final assembly. Exports to the developed countries are directly exposed to the global economic decline. On the other hand, contrary to the predictions of the decoupling enthusiasts, Japan's growing exports in the latter category have been indirectly affected by a decline in final (assembled) exports from the PRC (Fukao and Yuan 2009). The degree of export contraction suffered by Taipei,China and Korea has been much smaller compared with Japan, but, on average, notable higher compared with the other East Asian countries. As in the case of Japan, growing exports to the PRC does not seem to have provided a cushion against collapse in world demand for these two countries. The relatively lower degree of export contraction experienced by Korea, Taipei,China and the second-tier exporting countries in the region compared with Japan could possibly reflect consumer preference for price-competitive low-end products during this crisis.

Table 8 [ PDF 29.9KB | 5 pages ] compares growth rates of intra-regional exports of East Asian countries with that of these countries exports to the US and EU. There is no evidence here to suggest that the regional dynamic growth of East Asia has made its economies less susceptible to the world-wide trade contraction Naturally, for East Asia and also for all individual countries, the rate of contraction in exports to the US has been much sharper compared with exports to all other destinations. Exports to the PRC too, however, have recorded a significant contraction, more than 10% in most cases. The PRC's imports from Japan, Korea, and Taipei,China have shrunk more rapidly than imports from other countries. This is not surprising, given the dominant role played by the former countries in the supply of parts and components to ICT assembly activities in the PRC, which are heavily exposed to contraction in import demand in the US and other developed countries.

The data on export and import growth of the PRC (Table 9 [ PDF 11.5KB | 2 pages ] and Figure 5 [ PDF 24.6KB | 1 page ]), provide further evidence of the synchronous nature of the trade shock of the global economic crisis. In the first quarter of 2009 the PRC's exports to the US contracted by 15.4% accompanied by a contraction in exports to East Asia and the three sub-regions even at slightly higher rates (over 20%). PRC imports from most countries in the region have generally contracted at a much faster rate compared with exports, perhaps an indication of liquidation of imported parts and components by PRC firms given the gloomy market outlook for exports. Overall the PRC's intra-regional imports have contracted at a much faster rate compared to her imports from the US and EU.

Data on export growth by major commodity category for import and export trade of China, and export trade of Malaysia and Thailand are summarized in Table 10 [ PDF 12.1KB | 2 pages ] and Table 11 [ PDF 15.3KB | 1 page ] respectively. A notable patterns observable for manufacturing exports across all three countries is the relatively sharper contraction in the category of machinery exports (in which network trade is heavily concentrated) compared with other product categories, in particular traditional labor-intensive products (textiles and garments, footwear and other miscellaneous manufactures). Products belonging to the category of machinery and transport equipment, in particular ICT products and electronics, are predominantly consumer durables. Demand for these products is generally more susceptible than other categories to income contraction. For traditional labor intensive products, developing country producers have the ability to compete on cost and so perform better than developed-country counterparts even in a context of depressed demand.

Download this Paper [ PDF 222KB| 48 pages ].

Comment(s)

There are [0] comment(s) for this entry. Post a comment.