US recovery not likely to immediately boost AsPac exports – S&P

MANILA, Philippines - The recovery in the United States may not immediately lift the exports of Asia-Pacific countries including the Philippines, Standard & Poor’s said in a report.

“Benefits of the rejuvenated consumer demand in the US have so far been limited within its own borders. Emerging Asia’s export numbers continue to disappoint two years into the recovery of the US private sector,” S&P said.

The firm cited high levels of inventory and a smaller difference in labor costs between the US and emerging Asia as possible reasons for the absence of export recovery in Asia-Pacific.

 “An emerging risk is that the traditional trade links that transmitted US consumer demand to emerging Asian growth may work at a longer lag. A graver risk is that the links are structurally weaker due to a permanent loss in the region’s competitiveness,” Vice Conti, economist at S&P, said.

“With Europe likely to be sluggish for years to come and China’s growth moderating, a US recovery that does not generate Asian exports would necessitate a major rethink of growth strategies within the region,” Conti said.

According to Conti, this may mean more major structural reforms to further raise productivity in Asia-Pacific and to alter the balance between domestic consumption and savings.

 “On the other hand, if the trade-driven recovery is merely delayed by cyclical factors, then Asian firms and households might sit tight, and possibly receive some form of monetary or fiscal stimulus if the wait becomes too long,” S&P said.

Latest government data showed merchandise exports grew by 19.7 percent to $5.178 billion in November, the fastest pace recorded after June’s 21.3-percent increase. 

In the eleven months to November, outbound shipments went up 10 percent to $56.926 billion from $51.738 billion in the same period in 2013.

Japan continued to be the main destination for Philippine exports, accounting for 22.6 percent of total shipments for the 11-month period last year. This was followed by the US at 14.1 percent, China, at 13.1 percent, and Hong Kong at nine percent