Pedestrians in face masks walk on a road in Beijing’s Central Business District on July 16, 2020.
Wang Zhao | AFP | fake pictures
Southeast Asian nations are likely to benefit from China’s economic rebound as the country accounts for a “large share” of regional exports, an economist said this week.
China said on Thursday that its gross domestic product grew 3.2% for the second quarter of 2020, compared to the same period last year. The country’s GDP fell by 6.8% in the first quarter, when blockages occurred due to the coronavirus outbreak. Analysts expected GDP to grow just 2.5% for the April-June quarter.
“While numerous challenges remain, the rebound would revive hopes that China’s economy could help propel others,” Wellian Wiranto, an economist at OCBC Bank, wrote Thursday.
“The fact that China has a large share of ASEAN exports … takes on additional importance now,” he said, referring to the Association of Southeast Asian Nations.
That dependence on China was a “painful responsibility” in the first quarter, but the recent increase has made it a “key asset,” he added.
World trade will not be a strong boost for the region, it will be a modest boost.
Steve Cochrane
chief Asia Pacific economist, Moody’s Analytics
Southeast Asian countries send 18.8% of their exports to China, according to the note. China’s recovery will not “save the day” for these countries, but it would make a slight difference given that other export destinations, such as the United States, are still working to control the coronavirus situation.
Bounce signals
The broader Asia-Pacific region may also be entering the recovery phase, said Steve Cochrane, chief Asia-Pacific economist at Moody’s Analytics.
“We worried in May,” he told CNBC’s “Squawk Box Asia” on Monday, noting that economies in China, Australia and New Zealand are improving. This is because activity restarts as locks and restrictions are reduced, removing supply-side restrictions, he said.
Not everyone is so positive.
Vishnu Varathan, head of economy and strategy at Banco Mizuho, said the economic recovery in the first half of 2020 may have been “flattered” by various factors, such as “speculative” real estate investment and the fact that China was one of the first countries to emerge from the blockades.
“The coming recovery, in all likelihood, will be hampered by persistent waves of pandemic risks that collide with a new outbreak of tensions between the United States and China, and sheer uncertainty,” he wrote in a note Thursday.
Moody’s Analytics’ Cochrane agreed that social distancing and other risks will continue to be a sticking point.
“World trade will not be a strong boost for the region, it will be a modest boost,” said Cochrane.
In particular, he said that economies like Taiwan and South Korea, which export high-tech equipment to China, will benefit.
ANZ Bank said in a note on July 15 that China’s demand for South Korean products has improved, but that other major markets “are still struggling.”
“South Korea’s exports for computers, medicines, and bio-health have benefited from the pandemic, but their gains were more than offset by falling exports, such as petroleum products and automobiles, which were particularly affected by the blockades global, “ANZ analysts wrote. .
Still, “early signs” of a rebound are emerging and the rate of decline in exports should gradually slow as global containment measures have exceeded their peak, analysts wrote. Exports to the United States and Vietnam have returned to growth, while cars are recovering.
“Other indicators, such as South Korea’s manufacturing PMI (purchasing managers index), new export orders, and global trade indicators, such as the movements of ships carrying goods, also suggest that the worst is over,” he said. ANZ.
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