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Why It Matters

Asian exports still struggling

Singapore exporters had a rocky start to the third quarter - yet another sign that Asia's export engine is still sputtering amid weak global demand.

Data released on Wednesday showed that non-oil domestic exports from Singapore - one of the region's key bellwethers for trade - slid 10.6 per cent in July from a year earlier, far sharper than the 2.5 per cent decline expected by economists.

The drag came largely from electronics and petrochemicals exports. Shipments to all top 10 markets, save for the European Union, tumbled.

It was a similarly gloomy picture elsewhere in the region. South Korea's exports contracted 10.2 per cent in July from a year earlier, the 19th straight month of decline. The reading was worse than the median market forecast for a 7 per cent contraction.

Meanwhile, China's exports and imports fell more than expected last month, suggesting weakness in both external and domestic demand.

Exports are a vital economic pillar across the region, which has been hit hard by the slowdown in global trade since the financial crisis.

Before the financial crisis in 2009, the rule of thumb was that global trade grew at twice the rate of the world economy. However, since 2012, trade has been growing much slower - at more or less the same speed as the global economy.

With major economies such as the United States, China, Japan and the euro zone grappling with recovery and reform, tepid global demand has had a significant dampening effect on trade.

But some economists have also pointed to longer-term structural factors weighing on world trade - for instance, China becoming less exposed to global trade as it shifts from an industrial-led growth model towards consumption and services.

For small, trade-dependent Singapore, these shifts could mean that exporters here need to look closer to home - within Asean - for long-term growth prospects. Meanwhile, the Asian export chill is unlikely to thaw any time soon.

A version of this article appeared in the print edition of The Straits Times on August 19, 2016, with the headline 'Asian exports still struggling'. Print Edition | Subscribe