Asia's exports dilemma could still recover in 2017: analyst

That is if commodity prices start retracing from 50% drops by 2H16.

It has been noted that Asia’s export performance may look dire at first glance.

According to a research note from Standard Chartered, however, it sees a silver lining in the details. In value terms, the 2015 contraction in the region’s exports was the worst since the global financial crisis (2008-09). But in volume terms, the data is not so bad.

The steep drops in commodity and manufactured-goods prices have, in Standard Chartered's view, distorted the picture.

Here's more from Standard Chartered:

While we agree that we live in a nominal, not real, world, the fact that so much of the poor performance was due to the price effect gives us reason for optimism about export performance by end-2016. Global volume demand has been steady in the past five years.

In Asia, commodity-exporting economies such as Malaysia were less adversely affected by crude oil prices than by crude palm oil and liquefied natural gas prices. This is as Malaysia consumes crude oil, resulting in a smaller crude oil trade balance. In South Korea and Singapore (economies that export oil products such as petroleum products and petrochemicals), the overall trade balance improved even as petroleum product export values fell. These imbalances should fade if commodity prices stabilise, or even reverse if prices rebound.

If commodity prices start to retrace from their previous drops by 50% from H2-2016, Asia’s export value growth should recover in 2017. Economies such as Australia, South Korea, Singapore and Malaysia should outperform and experience positive growth by Q1-2017. Even if prices remain stable, exports should still grow modestly in 2017.