Slowing Exports Another Growth Headwind?

This Friday China trade figures are due. There will be a number of focus points. On the export front (market expects +4.0% y/y, versus 7.1% previously), September prints for South Korea and Taiwan already show a further slowing in external demand. The chart below overlays export growth for these two economies and China. The series are all reasonably correlated with each other, albeit not as strong in recent years, as Covid/supply chain disruptions have generated spikes/slumps in particular months.

• Still, the broad trends tend to follow each other. Taiwan's export update last Friday was particularly soft, falling to -5.3% y/y, well below expectations and the softest pace since early 2020.
• The longer run correlation between Taiwan and China export growth is 36%, slightly higher for South Korea at 41%, although as noted above these are lower in recent years.
• A weaker export picture for China, which has been a source of strength for the country earlier 2022, will put greater emphasis on the domestic recovery, particularly as we progress into 2023.
• Imports are expected to remain close to flat (0.2% y/y expected, versus 0.3% y/y previously).

Fig 1: China, South Korea & Taiwan Export Growth y/y

Source: MNI - Market News/Bloomberg