Why analysts are not convinced that Asia's exports are finally recovering

Sorry to burst your bubbles.

According to DBS, a front page article in a major international business paper last week said economic recovery in the West was fuelling a nascent export recovery in Asia. DBS analysts don't think so.

Asia’s exports continue to grow at 5% trend rate – the same rate they’ve run at since early-2011 – but for the past three months exports have run decidedly below trend, not above trend.

Here's more from DBS:

As of August, Asia-9 exports are up still up 5% YoY. But if things don’t improve over the next 3 months then the trend that any reasonable person draws through the series would start to run noticeably more horizontal.

This isn’t to say the outlook hasn’t improved. Exports to Europe – which used to fall at a 5%-7% rate, have started to turn sideways. Europe is no longer shrinking and one would expect import demand to stabilize accordingly.

We do not expect Asia’s exports to Europe will turn north in any significant way but merely running sideways is a big step forward – there is no longer a big hole in total revenue that has to be made up for elsewhere.

Asia’s total / global export growth should look better for this reason. 

Alas, exports to the US have slowed considerably. This should come as no surprise. US growth has slowed over the past year, which ultimately is why Fed decided to not to taper in September.

GDP has grown only 1.6% over the past four quarters; back in Sep12 it was growing at a 3% YoY rate.

Asia’s exports to the US grew at a 5% trend rate between early-2010 and early-2012. For the past 18 months, exports to the US have not grown one iota.