Aggregate world trade data mask Asia/RoW disparity - Capital Economics
Global Economics

Aggregate world trade data mask Asia/RoW disparity

Global Economics Update
Written by Gabriella Dickens

While Asian goods exports have fared better than those from the rest of the world and especially those from advanced economies over the past year, this performance gap should narrow as economies reopen.

  • While Asian goods exports have fared better than those from the rest of the world and especially those from advanced economies over the past year, this performance gap should narrow as economies reopen.
  • Global goods trade continued its strong recovery at the start of 2021, rising 4% above its pre-virus level. (See here.) But the aggregate figure masked a marked difference in the fortunes of exports from Asia and the rest of the world. (See Chart 1.) While exports from the euro-zone and the US were still below their pre-virus levels in January, exports from the Asian Tigers and particularly China were well above. (See Chart 2.)
  • Asian exports have benefitted from lockdowns prompting a shift in spending patterns, particularly in DMs, towards the types of goods which they dominate in terms of market share, such as electronics and household items. For example, China’s nominal goods breakdown shows that last year’s surge in exports leaned heavily on furniture, electronics, and recreational products. (See Chart 3.)
  • In contrast, as restrictions have weighed on transport demand, goods exports from advanced economies have been hit especially by a shift away from purchases of transport equipment and fuel. Looking at an average of US real export data for January and February – to limit the distortions from weather-related disruptions in the latest data (see here) – fuel exports accounted for 3.2%-pts of the 3.9% shortfall in total good exports from their December 2019 level. Transport equipment excl. autos – mainly aircraft – accounted for an additional 2.1%-pts, made up for somewhat by strong exports of intermediary goods. (See Chart 4.)
  • Brexit disturbances around the turn of the year in the UK aside, US goods exports have fared the worst among DMs. In addition to the US losing out from being a bigger exporter of fuel, recoveries elsewhere have been slower, so demand for US exports has been relatively weak while its imports have rebounded.
  • Looking ahead, as vaccines allow restrictions to ease, we expect global spending patterns to normalise. This means that demand for Asian electronics and furniture should come off the boil, while DM exports should start to play catch-up as travel and tourism sectors pick themselves up off the floor.

Chart 1: CPB Real Goods Exports* (Dec. 2019 = 100)

Chart 2: CPB Real Goods Exports* (Dec. 2019 = 100)

Chart 3: China Nominal Goods Exports Product Breakdown ($, Dec. 19 = 100)

Chart 4: US Real Goods Exports % Difference from December 2019 Level* (%-pt Contributions)

Sources: Refinitiv, Capital Economics


Gabriella Dickens, Global Economist, gabriella.dickens@capitaleconomics.com
Simon MacAdam, Senior Global Economist, simon.macadam@capitaleconomics.com