A burst of global trade starting from the end of last year has been driving Asia’s economic growth, but it isn’t clear whether the region can count on it to continue.
The recent step up in trade was sizable: South Korea, for one, reported that July exports jumped around 20 percent from the same month last year. The global trade pickup since the fourth quarter of 2016 has been particularly notable because it followed about five years of malaise.
Still, some analysts were pessimistic about what the next year holds.
“Things are starting to get messy,” Rob Carnell, chief economist for Asia at ING, said in a note this week, pointing to factors including tensions over North Korea’s missile program.
Carnell explained that the last few months of trade increases relied to a large extent on earlier weakness. “Now the easy growth is over, the export path ahead looks harder going,” he said.
The ING economist also noted that some countries have benefited from their currencies suddenly becoming stronger in the face of a weakening dollar, but that may not continue for long.
Others also pointed to headwinds ahead.
Freya Beamish, chief Asia economist at Pantheon Macroeconomics, told CNBC on Tuesday that she didn’t expect the trade growth to continue in Asia. Instead, she said, a slowdown would likely be apparent in fourth-quarter data.
“Demand in the U.S. and Europe is strong. In China, it’s slowing rapidly,” she said, adding she expected those developed markets to cool toward the end of next year. “That story has rolled over pretty quickly.”
