Trade And Current Account Balance Forecasts

TRADE AND CURRENT ACCOUNT BALANCE FORECASTS

In addition to their regular forecasts for the major economic variables, twice a year (in February and August) we survey our Asia Pacific Consensus Forecasts panellists for their projections for exports, imports and current account balances for the next 4 years. Our panellists are also asked for their predictions for growth in the volume of goods and service exports and imports over the same period.

Our survey for Trade and Current Account Balances covers each of the countries listed below. For illustrative purposes we have included forecast tables for four countries along with a portion of the text commentary taken from our February 2011 survey below. To view a sample issue of Asia Pacific Consensus Forecasts please click the "Download Sample Issues" button below.

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e = consensus estimate from latest survey.

As developed economies lagged behind in the recovery stakes last year, emerging Asia continued to lead the global revival, buoyed by firmer world demand and stronger intra-regional trade. The strong export recoveries helped countries such as China, Indonesia and the Philippines bounce back in the fourth quarter of 2010. This lifted full-year growth in China by a sizzling 10.3%, while the Philippines saw torrid growth of 7.3% and Indonesia notched up 6.1%. With the global economic backdrop set to improve this year - thanks to signs of a turnaround in the US and brighter growth prospects in the Euro zone - Asia's external sector looks well supported in 2011. Most countries are expected to post surpluses on their external accounts over the near term, although China's hefty trade and current account surpluses are slated to shrink beyond 2012. This probably reflects rising imports as domestic consumption strengthens in line with the emergence of a burgeoning middle class. Another factor which could have an adverse effect on the regional external accounts is the unrelenting rise in global oil prices. WTI stood at US$84.8 per barrel on our survey date, and during the previous commodity boom, exerted huge pressure on the external accounts as governments struggled with spiralling import bills.

The table below shows our panellists' projections for growth in goods and services exports and imports, measured in real terms (i.e. excluding the effects of changes in trade prices). In each case, we have also calculated estimates of the contribution to growth implied by our panels' forecasts for changes in export and import volumes, measured as the change in net exports (goods and services exports minus goods and services imports) as a percentage of GDP in the previous year. This indicates whether the external sector is adding to or subtracting from overall GDP growth.

According to our panellists, all countries witnessed an increase in both export and import volumes in 2010, following a slump the previous year. The improving trade performances played a major part in last year's regional recovery and trade volumes looked to have hit double-digits in many cases. However, in some countries, the external sector is believed to have subtracted from overall growth as import volumes outpaced exports, namely in Malaysia and South Korea. Going forward, trade volumes look set to remain firm this year amid expectations of an improvement in the global economy.

e = consensus estimate from latest survey.

A portion of text from Asia Pacific Consensus Forecasts, February 14, 2011.

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