Supply chains and changing trade patterns

We recently concluded our first event in Singapore looking at the world of supply chains and changing trade patterns. Special thanks to our panelists – Nick Marro, Senthil Kumar, Sarindar Pal Kaur Frost & Natalie Clark.

For those who missed it, here are some key takeaways from the discussion:

  • Relatively strong growth this year (5.2%) might not translate into evenly strong import performance.
  • Growth is unbalanced – with a strong recovery in household and private business demand unlikely until H2 2023.
  • Soaring global rates have been driven by China-US West Coast routes – but these are unlikely to return to 2021-22 levels.

Asia remains strong, but it’s export boom is likely over… for now

  • Asia’s aggregate real GDP growth will remain stable in 2023 (3.7%, vs 3.4% in 2022, 5.8% in 2021).
  • ASEAN’s growth is also strong in 2023 (4.1%, vs 5.4% in 2022, 3.7% in 2021).
  • Beyond China & ASEAN, economies like Australia (1.3%), Japan (1%) and India (5%) will all see softer growth.
  • Export growth is on a downwards trend, as Asia’s biggest external markets continue to struggle.
  • But what about import demand? Intermediate and consumer goods may see some brighter prospects, as FDI diversification picks up.

Asia’s trade pacts will facilitate supply chain expansion

  • Harmonisation under RCEP is making some business environments more attractive as sourcing/manufacturing locations (Philippines, Cambodia, Indonesia).
  • CPTPP enlargement is improving business and operational conditions for the region, opening markets for future trade flows.
  • These won’t compensate for lower global growth in the short term, but in the long term it will increase the region’s competitiveness and develop domestic demand drivers.

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