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Research Team at Standard Chartered expects nominal export growth in Asia to ease to 4.2% y/y in 2019 from 9.6% and 9.9% in 2018F and 2017, respectively, with a moderation both in volume and value terms.

Key Quotes

“Export volumes are likely to weaken for the following reasons: (1) external uncertainty due to the US-China dispute, exacerbated by US Vice President Pence’s 4 October speech to the Hudson Institute, is likely to persist into 2019; (2) the robust electronics cycle that boosted export growth in 2017 and H1-2018 has begun to moderate; and (3) China’s inventory rebuilding cycle, which boosted Asia’s export volumes, has also eased and is unlikely to provide support in 2019 given China’s economic slowdown.”

“From a price-effect viewpoint, the value improvement due to the reversal of the Q2-2014 to Q1-2016 price decline is largely done.”

“The current Brent crude oil trading range of USD 75-85/barrel is roughly at the past-10-year average. Our base case assumes that prices remain at current levels; based on the five-year average volume growth rate, export value growth should slow in 2019.”