Asian Tigers Economic Update – April 2013

Exports from both Australia and New Zealand to the Asian Tiger economies (ASEAN, S Korea, HK and Taiwan) remain below their previous peaks, largely reflecting lower prices for key export commodities.

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  • Exports from both Australia and New Zealand to the Asian Tiger economies (ASEAN, S Korea, HK and Taiwan) remain below their previous peaks, largely reflecting lower prices for key export commodities. The latest data shows a modest pick up in New Zealand exports and commodity prices but that is not the case for Australia, although prices have started rising again. So the long-running process of closer integration with this region has stalled recently.
  • This disappointing export record also reflects the slower growth that has been seen across the region – which is heavily reliant on world trade. Export growth from the Tigers to the rest of the world has slowed sharply through the last few years, in line with the profile of world trade.
  • This export slowing has fed into much weaker growth in industrial output and, more generally, to a softening in the pace of GDP growth. Tiger economic growth peaked at almost 10% yoy in early 2010 but by late 2012 it was down to an underlying rate of 3 to 4%.
  • Governments around the region are counting on an upturn in world trade to help kick-start faster growth in the traditional way, while low interest rates and public spending increases provide a boost to domestic demand.
  • We are expecting a fairly modest upturn in growth, partly reflecting the absence of a prior recession to bounce back from. Growth across the Tigers of around 3¾% and 4¼% is predicted for 2013 and 2014.

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