Slight decline seen for AsPac exports in H1

MANILA, Philippines — UK-based think tank Oxford Economics said exports of goods from Asia are expected to contract this year with the global recession likely to weaken demand.

In its research briefing titled “The Export Slump Isn’t Over Yet,” Oxford Economics said it is anticipating moderate declines in exports in the first half of 2023.

“After falling around six percent in Q4 2022, we expect Asian real goods exports to fall another one to two percent over the course of H1 2023, and exports to fall four percent year-over-year over the whole 2023,” the think tank said.

The expected contraction for this year, Oxford Economics explained, is smaller than the 11 percent drop in 2009, but bigger than the decreases of 1.2 percent decline in 2001, 0.4 percent in 2020, and 0.3 percent in 2015.

With a global recession expected in the first half, it said this could weigh further on Asian exports.

“The negative impact of higher interest rates and squeezed real incomes is still materializing and will curb growth in advanced economies,” it said.

In the US in particular, it said the restrictive US Federal Reserve policy and past tightening is expected to lead to a mild recession starting in the second quarter.

“Against this background, US imports will likely fall further, with weakness in a broader range of products than in H2 2022,” Oxford Economics said.

In the eurozone excluding Ireland, it said monthly indicators suggest the weak end to 2022 would carry over in the first quarter this year, with gross domestic product likely to contract again.

In addition, the think tank said the impact of the monetary tightening has yet to be felt in the Eurozone and many other economies.

Oxford Economics pointed out that the boost from China’s reopening and relaxation of pandemic-related restrictions may not be enough to offset the slowdown in demand from the advanced economies.

“There might be a slight rebound in Chinese exports from lockdown disruptions in November and December, with perhaps some positive impulse to imports from the region. But we expect this to be small and short-lived, with Chinese exporters also facing the same weak global demand as everywhere else,” it said.

Last year, Philippine merchandise exports inched up by 5.6 percent to $78.84 billion from $74.65 billion in 2021.