Asia week ahead: Export recovery in full swing

China and Taiwan are due to report trade figures for February, while the Philippines does the same for January.

In general, regional exports have been enjoying a strong run since the fourth quarter of 2020. The January figures revealed strong momentum continued in 2021. The sharp plunge in trading activity with the onset of the Covid-19 pandemic in early 2020 explains some of the outsized year-on-year growth and our house forecasts of close to 40% YoY jump in China’s exports and a 26% surge in Taiwan’s in the first two months of this year underscores this.

It's not just favourable base year effect that’s are at work here. The post-Covid-19 recovery of global demand is also supporting Asian exports

However, it’s not just a favourable base year effect that’s at work here. The post-Covid recovery of global demand is also supporting Asian exports. By product type, electronics and automobile are leading the strong growth trend, more so amid the ongoing shortage of semiconductor chips for the automobile sector, which is pressuring these exports higher. Asia’s electronics heavyweights - China, Taiwan, Korea, Singapore and Malaysia are the clear beneficiaries.

Meanwhile, manufacturing should follow exports growth upward, though industrial production data from Malaysia nor India is expected to do that. Tighter Covid-19 moment restrictions in Malaysia is the reason while in India, close to flat year-on-year infrastructure industry output in January pointed to the same for total IP growth.

India’s inflation for February will be rather interesting next week, as it has come down in recent months to the central bank's policy target of 2-6%, but reports of rising food and fuel prices hint at higher inflation. India's central bank is the first Asian central bank to tighten via a 50 basis points CRR hike in February.