As the temporary drivers that boosted global exports in 2017 are set to fade away, the world’s exporting nations, particularly in Asia, are unlikely to see the same export growth they witnessed in 2017, according to the Standard Chartered’s global economic outlook report for 2018 titled ‘Beware of the dog’.
“Two of the drivers of stronger exports in 2017 were temporary: the recovery in prices of exported goods (which followed commodity prices with a lag) and China’s inventory restocking cycle,” the report said.
It further noted that exports volume data, which has remained sluggish during the global financial crisis in 2007/08, is likely more accurate reflection of the underlying trend in world exports.
Hence the report said Asia, the region most open to trade, cannot count on the same degree of external support that it received in 2017.
Sri Lanka also witnessed a surge in exports in 2017. The exports continued to record a growth momentum for more than eight months in 2017, compared to 2016, except in three instances, the country’s Export Development Board (EDB) recently said.
As per the latest provisional merchandise and export statistics, the EDB said the exports in the first 11 months of 2017 grew 10.82 percent year-on-year (YoY) to US $ 10.4 billion. The government has set up a US $ 20 billion export target by 2020.
Sri Lanka’s share of global exports reduced from 0.09 percent in 2000 to 0.06 percent in 2016, while its exports as a share of GDP declined from 33.3 percent in 2000 to 12.7 percent in 2016.
However, the regaining of GSP Plus and lifting of European Union ban on Lankan fisheries products in 2017 helped Sri Lanka to boost its export earnings.
Sri Lanka is yet to diversify its export basket and markets. Exports are still concentrated on a few, mainly non-technology products such as apparel, tea, spices etc. Hence, the country’s trade deficit is largely offset by workers’ remittances and tourism earnings.
Meanwhile, the Standard Chartered report said a structural upswing still appears to be in place in the electronics exports sector, led by persistently strong semiconductor demand.
“This may support still-solid growth in the main producing economies of Korea, Vietnam and Taiwan in 2018.We expect US and euro-area growth to be more driven by pent-up investment demand in 2018, which has historically been less supportive of emerging markets that consumer demand driven growth,” the report noted.