A turning point for Asian exports?

The outlook for Asian exports in 2020 is bright.

The period of contraction in exports seen throughout Asia in 2019 is expected to end in the first half of the calendar year, with a return to a modestly positive performance – which should eventually lead to a similarly modest recovery in the region's growth.

The year 2019 was a very challenging one, with trade tensions between the US and China coming on top of a downturn in the global semiconductor cycle, which combined to force a sharp slowdown across the board.

In 2020 the cloud looks to be clearing. A preliminary deal between the US and China is a strong step in removing a headwind that had hampered global trade for quite some time. I think that will clear the way for a recovery in Asian exports.

More importantly, the market is starting to see signs of a renewed upturn in the global semiconductor cycle.

Increasing demand for new consumer products like the iPhone and increased infrastructure spending on the fifth generation of mobile devices should help propel a recovery in the global tech cycle, which we believe will boost Asia's export numbers.

“[Expect a] return to a modestly positive performance [for Asian exports] – which should eventually lead to a SIMILARLY modest recovery in the region's growth.” 

-Khoon Goh

Headwinds

Of course, there are still headwinds. Tensions between the US and China could re-escalate without warning. The US election looms in the second half, which may see a return to volatility and uncertainty.

But for the first half of 2020 - based on what we know now - suddenly things are looking a lot brighter.

Khoon Goh is Head of Asia Research at ANZ