JAKARTA: In the good old decades, many Asian governments could stick to a simple economic strategy – ramp up exports, and reap solid growth rates.
Now, export-led growth no longer serves the region well and Asia is struggling to overhaul that economic model as it waits for world trade to recover.
And the rebound “is going to be capped”, says HSBC economist Fred Neumann, because of changes in the world economy, including how American consumers are “much more frugal” than a decade ago.
Asian exports to the United States have risen this year, but Neumann says such growth now is more driven by investment in software development and shale-oil drilling than by activity that pulls in imports.
Stalled global trade talks and the shrinkage of manufacturing supply chains that stretch from China, the world’s workshop, are making policymakers from Bangkok to Seoul consider new models as exports may never again grow rapidly as in the 2000s.
“The global trade pattern has changed,” Paiboon Kittisrikangwan, a deputy governor at Thailand’s central bank, told Reuters last week. The patchy recovery in advanced economies isn’t producing the same import demand as before, he said.
South Korean Finance Minister Choi Kyung-hwan has called for a “strategic change” by exporters to target Chinese consumers rather than factories. Indonesian Trade Minister Rachmat Gobel, pressed on what he’s doing to boost exports, says he will seek more access for local goods to Western markets.
