There is good news for global trade: the latest numbers point to a V-shaped recovery, showing a rise in both value and volume. The improvement in trade volumes, which grew 2.6% month-on-month in January 2021, has kept in step with the industrial production recovery while the sharper uptick in values also reflects the improvement in commodity prices, particularly fuel.
Asia continues to drive the global recovery
According to regional data, the recovery is mostly an Asia story. The improvement in export growth in January 2021 is led by China, which grew exports by approximately 55% (year-on-year) and other developed Asian economies including Singapore, Taiwan, Hong Kong and Korea. Even emerging Asian economies such as the Philippines, India and Malaysia have seen rising export growth. Other large exporters such as the euro area are still seeing volumes below pre-pandemic levels.
So, where is the demand for Asian exports coming from? A quick look at import data shows clearly that the US, with a strong vaccination programme and sizeable stimulus, remains the importer-in-chief, with imports growing by approximately 8% (year-on-year). All other major advanced economies continue to import less than pre-pandemic levels. China has also seen a pick-up in import demand (approximately 19% year-on-year), as have other advanced Asian economies, which in part reflects demand for intermediate products for their own exports, as well as restocking activity.
Is the Asian export growth sustainable?
Latest PMI data (March 2021) out of China and the US suggests stronger IP growth, which should further bolster the global export recovery as the manufacturing revival has fuelled export growth. So far, the US rebound is helping Asia’s growth story more than higher US interest rates – a source of concern – are hurting it.