Asian exports, investments, retail sales remain sluggish amidst oil price drop

Should Asian economies be bothered as early as now?

UBS' charts show Asian exports, investment, and retail sales in most economies remain cyclically weak, despite low oil prices.

According to a research note from UBS, oil and commodity prices have been low for a while now and yet there is little evidence to support the earlier optimistic view that lower oil prices will boost consumption and investment meaningfully.

However, lower oil prices and commodity prices are boosting current account surpluses for Asia's non-commodity exporting economies and that helps sustain monetary policy divergence between Asia and the Fed.

Meanwhile inflation is trending lower and that biases policy makers to cut rates to prevent real rates from rising too much.

Here's more from UBS:

Where's the top line growth? For stronger top line growth Asia needs one of two things to happen (and preferable both): a meaningful acceleration in exports or a big pick up in construction and property.

Looking across the region, we continue to argue that exports are mainly a function of the global credit cycle; while construction and property markets are a function of local credit cycles.

The global private sector has not deleveraged enough to form a strong base for re-leveraging to drive trade and to us that is why exports are struggling to achieve lift off.

Likewise, when look at the Asia's domestic credit cycle we still believe it is too early to call the bottom in most of the region. The outlier here is India and perhaps Indonesia later this year.