Statistical Yearbook for Asia and the Pacific 2012
 
   
G. Economy
 
G.5. International trade

The economic slowdown in developed economies suppressed both global demand and Asian and Pacific trade in 2012, but the Asian and Pacific region still registered a trade growth rate higher than that of overall world trade. The export growth of China and of developing economies in the region continues to be more resilient than that of developed economies and, in addition to domestic demand, the growing intraregional demand should be considered as an important factor in the trade-led growth of the region. However, developments in 2012 reveal that developed economies outside the region remain important markets for Asian and Pacific final goods. The subdued outlook for developed economies continues to raise concerns about the prospects for the economic growth of economies with small domestic markets for which trade remains the major growth engine.

Merchandise trade slowdown is raising concerns about economic growth prospects for the Asian and Pacific region.

Figure G.5-1
Merchandise trade (annual growth) and trade dependence of developing economies in Asia and the Pacific, 2008 to 2012

Figure G.5-1 Merchandise trade (annual growth) and trade dependence of developing economies in Asia and the Pacific, 2008 to 2012The slow growth in developed economies and the uncertainties associated with the European economic crisis continue to suppress global import demand. Asian and Pacific merchandise trade again faced a serious challenge in 2012. The annual growth of merchandise exports in developing economies in the region decreased from 21 per cent in 2011 to a mere 3.3 per cent in 2012 (see figure G.5-1). Excluding China and India, developing economies in the region had export growth of only 1.2 per cent. Imports have also stagnated in developing economies, with the import growth rate dropping from 24 per cent in 2011 to slightly above 4.2 per cent in 2012. For developed economies, exports contracted by 3.4 per cent while imports grew by 4.3 per cent in 2012.

On average, export dependency in developing economies in Asia and the Pacific (excluding the two largest economies, China and India) is just above 40 per cent, with many small economies depending much more on international trade. For example, exports contribute much more than 100 per cent of GDP in Singapore and in Hong Kong, China (which are heavily engaged in re-exports), 88 per cent in Viet Nam, 75 per cent in Malaysia, 60 per cent in Cambodia, and more than 50 per cent in Turkmenistan and Solomon Islands. The recent global and regional trade slowdown adds to existing concerns among small economies that rely heavily on exports as an engine of economic growth.

Led by East and North-East Asia, the Asian and Pacific region continues to capture an increasing share of world merchandise trade.

Figure G.5-2
Asian and Pacific region’s merchandise trade share in global trade, total and by subregion, 2000, 2008 and 2012

Figure G.5-2 Asian and Pacific region’s merchandise trade share in global trade, total and by subregion, 2000, 2008 and 2012Over the past 10 years, Asia and the Pacific has gained a significantly larger share of world merchandise trade. In 2012, the region surpassed Europe to become the world’s largest trading region with a share of almost 37 per cent of world exports and 36 per cent of world imports. The region’s gains in world trade were driven by the large economies in East and North-East Asia. Since 2004, China has been the largest exporter in the region and it accounted for 11 per cent of world exports in 2012. Japan and the Republic of Korea are the second and third largest exporters, contributing 4 per cent and 3 per cent of world exports, respectively, in 2012. These economies, combined with the rest of East and North-East Asia, accounted for 21 per cent of world exports and imports (see figure G.5-2). South-East Asia’s share of world exports and imports was about 7 per cent. North and Central Asia captured approximately 4 per cent of world exports, while this subregion accounted for about 3 per cent of world imports. South and South- West Asia contributed about 3 per cent of world exports and 5 per cent of world imports. The Pacific region, despite including Australia and New Zealand, represents a relatively minor share of regional and global trade. In 2012, the Pacific’s contribution to world trade remained less than 2 per cent, with Australia and New Zealand accounting for about 97 per cent of that amount.

Intraregional merchandise trade in Asia and the Pacific is growing at a faster rate than trade with the rest of the world.

Intraregional trade in Asia and the Pacific has been increasing faster than trade with the rest of the world, especially exports. The share of intraregional exports grew from 45 per cent in 2000 to 53 per cent in 2012. During the same period, total intraregional exports and imports quadrupled, while exports to and imports from the rest of the world increased by just over threefold. The share of intraregional imports remained stable at just over 50 per cent over the same period.

Figure G.5-3
Intraregional merchandise trade as a proportion of total merchandise trade in the Asian and Pacific region (percentage), 2000, 2008 and 2012

Percentage share in world exports

Based on 2012 data, the Pacific, South-East Asia and East and North-East Asia continue to rely heavily on intraregional markets for their exports; their dependence on intraregional exports is higher than 50 per cent (see figure G.5-3). In contrast, about one fourth of exports from South and South-West Asia, and North and Central Asia were directed to Asian and Pacific markets. In 2012, the importance of intraregional sources for imports to the Asian and Pacific subregions ranged from around 35 per cent to just above 62 per cent. The increasing importance of intraregional trade partly reflects the impact of production fragmentation and the related establishment of global and regional value chains, which have contributed to greater regional integration. In addition, growing intraregional demand has also been supported by the dynamic growth of emerging economies in the region.

Figure G.5-3 Intraregional merchandise trade as a proportion of total merchandise trade in the Asian and Pacific region (percentage), 2000, 2008 and 2012 - Percentage share in world exports
Percentage share in world imports
Figure G.5-3 Intraregional merchandise trade as a proportion of total merchandise trade in the Asian and Pacific region (percentage), 2000, 2008 and 2012 - Percentage share in world imports
Growth in commercial service trade slowed in 2012.

Figure G.5-4
Growth rates of commercial service trade, Asian and Pacific subregions, 2000 to 2012

Intraregional export share

Globally, in 2012, the export of commercial services grew by only 1.6 per cent and the import of commercial services grew by only 2 per cent. The Asian and the Pacific region registered the highest growth of commercial service exports and imports of all regions, at 5.2 per cent and 5.9 per cent, respectively. This growth was, however, much slower than in 2011, when exports grew at a rate of 12.5 per cent and imports at 13.7 per cent (see figure G.5-4). This slowing down of commercial service exports in 2012 was caused by, among other factors, the overall contraction of import demand in the European Union that year. Despite the slowdown of overall commercial service exports, the Asian and Pacific region increased its share of global exports of several services, such as construction, computer and information services, and personal, cultural and recreational services.

Figure G.5-4 Growth rates of commercial service trade, Asian and Pacific subregions, 2000 to 2012 - Intraregional export share
Intraregional import share
Figure G.5-4 Growth rates of commercial service trade, Asian and Pacific subregions, 2000 to 2012 - Intraregional import share

In 2012, the Pacific and South and South-West Asia experienced the lowest growth in commercial service exports (0.1 per cent and 0.8 per cent, respectively) of all Asian and Pacific subregions. Since 2008, the imports of commercial services into South and South- West Asia continued to experience economic uncertainty, and imports contracted by 12.7 per cent in 2012. In contrast, that same year, North and Central Asia recorded the highest growth in commercial service exports and imports of all subregions (see figure G.5-4).

For commercial service exports, developing economies in the region show greater resilience than developed economies.

Figure G.5-5 Export of commercial services and annual growth rates, developing and developed economies in Asia and the Pacific, 2008 to 2012

While the commercial service export growth of developing economies in the region slowed from 14.2 per cent in 2011 to 6.4 per cent in 2012, developed economies in the region experienced a contraction in 2012 of -0.4 per cent compared with 4.9 per cent growth in 2011. Despite added volatility resulting from global economic uncertainties, commercial service exports from developing economies in Asia and the Pacific recorded an average growth of 7.4 per cent per annum from 2008 to 2012 (see figure G.5-5). In contrast, exports from developed economies in the region, on average, stagnated during the same period. Since the global economic recession began, developing economies in the region have shown more resilient growth in commercial service exports than developed economies. This has been driven mainly by the sectors of computer and information services, communication and travel, as well as a contraction in financial service exports from developed economies.

Box G.5-1
What issues are Pacific island developing economies facing in international trade?

Compared with their Asian counterparts, Pacific island developing economies (PIDEs) are very small. In 2011, merchandise exports in this subregion made up 0.15 per cent of total merchandize exports in the Asian and Pacific region, and the corresponding figure for service exports was 0.23 per cent. Despite their diversity, there are several common factors that prevent these developing economies from reaching their full trading potential.

First, not only are most PIDEs small in terms of population and geography, but they are far from major markets. This means that, in addition to not being able to benefit from specialization in activities associated with economies of scale, they face high transportation costs and their goods spend a long time in transport. For example, Kiribati’s nearest market is Hawaii, which is 4,000 km away. Unit costs are high, and small cargo volumes put airline carriers in the position of a monopoly.a Service is infrequent and some locations are not served at all. The situation is further exacerbated by the fact that this subregion has a dispersed population scattered across multiple outer islands with infrequent and irregular transportation options. Another hindrance to trade that the developing economies in the Pacific face is their exposure to natural disasters. For example, a 2009 tsunami in Samoa damaged most tourism infrastructure (tourism is the country’s major export earner), and the country was hit again three years later by a category 4 cyclone.b, c This exposure results in volatility of exports earnings.

Agriculture is an important economic sector of most PIDEs, although the contribution of this sector to the economy is uneven across the subregion.d Despite their eligibility for preferential market access in Australia and New Zealand, agricultural exports are significantly hampered by the inability of PIDEs to overcome nontariff barriers. For example, the rigorous physical quarantine requirement for importing Pacific island taro into Australia drastically reduces its shelf life, resulting in the need for it to be air freighted, and thus reducing its competitiveness.e There is also the limited capacity of the developing economies to deal with several sanitary and food safety regulations.f

A potential area of comparative advantage is fisheries. However, most PIDEs do not have their own fishing boats, and many resort to flagging foreign vessels in exchange for license fees. Most also do not have sufficient capacity to process or preserve the fish; cold storage is not always available, and the costs of establishing and operating one can be prohibitive. Additionally, while opportunities for intraregional trade exist with the Melanesian Spearhead Group Trade Agreement, the impact of this agreement is somewhat lessened by the fact that these developing economies produce similar products.g

____________________
a See www.adb.org/sites/default/files/pub/2004/swimming_against_tide.pdf.
b See www.mof.gov.ws/Portals/195/tsunami_publication2_wf_blanks.pdf.
c See www.ausaid.gov.au/HotTopics/Pages/Display.aspx?QID=936.
d In 2011, the total percentage of value added by the agricultural sector in the Pacific (excluding Australia and New Zealand) was 12.7 per cent. It was especially high for such economies as Papua New Guinea (31.1 per cent), Solomon Islands (28.9 per cent), the Federated States of Micronesia (26.6 per cent) and Kiribati (25.8 per cent), but much lower for the Cook Islands (4.9 per cent), Palau (3.2 per cent), French Polynesia (2.4 per cent) and New Caledonia (1.6 per cent).
e Andrew M. McGregor, “The export of horticultural and high-value agricultural products from the Pacific islands,” Pacific Economic Bulletin, vol. 22, No. 3 (October 2007), pp. 81-99.
f Ibid. McGregor’s paper provides a good country-specific overview.
g See www.pacificpolicy.org/wp-content/uploads/2012/05/D03-PiPP.pdf.

Further reading

ESCAP. Asia-Pacific Trade and Investment Report 2012: Recent Trends and Developments. Bangkok, 2012. ST/ESCAP/2650.

––––––––. Asia-Pacific Trade and Investment Report 2013. Bangkok, forthcoming. United Nations Conference on Trade and Development. Trade and Development Report 2013. Geneva, forthcoming.

World Trade Organization. International Trade Statistics 2012. Geneva, 2012. ––––––––. World Trade Report 2013. Geneva, forthcoming.

Technical notes

Exports and imports of merchandise (billions of United States dollars, percentage of GDP, percentage change per annum) This covers all types of outward and inward movements of goods through a country or territory, including movements through customs warehouses and free zones. Goods include all merchandise that either add to or reduce the stock of material resources of a country by entering (imports) or leaving (exports) the country’s economic territory. Unless otherwise indicated, exports are valued at transaction value, including the cost of transportation and insurance to bring the merchandise to the frontier of the exporting country or territory (“free on board” valuation). Aggregate calculations: Sum of individual country values (millions of United States dollars); aggregate values are validated using GDP in current prices of United States dollars. The GDP figures up to 2011 are sourced from NAMAD. The 2012 figures are estimated by ESCAP by converting the GDP growth rate (percentage) taken from the International Monetary Fund (IMF) World Economic Outlook Database to million United States dollars (available from www.imf.org/external/pubs/ft/weo/2013/01/weodata/index.aspx). Missing data are not imputed.

Exports and imports of services (billions of United States dollars, percentage change per annum) Exports (credits or receipts) and imports (debits or payments) of commercial services derived from statistics on international service transactions are included in balance of payments statistics, in conformity with the concepts, definitions and classification of the IMF Balance of Payments Manual, 5th ed. (1993). Aggregate calculations: Sum of individual country values (millions of United States dollars); aggregate values are validated using GDP in current prices of United States dollars. The GDP figures up to 2011 are sourced from NAMAD. The 2012 figures are estimated by ESCAP by converting the GDP growth rate (percentage) taken from the World Economic Outlook Database to million United States dollars (available from www.imf.org/external/pubs/ft/weo/2013/01/weodata/index.aspx). Missing data are not imputed.

Asian and Pacific intraregional exports and imports of merchandise (billions of United States dollars, percentage of total merchandise exports/imports, percentage change per annum) The merchandise exports and imports destined to or sourced from the Asian and Pacific region as a percentage of total merchandise exports and imports. Aggregate calculations: Intraregional exports/imports as a percentage of the sum of total exports/imports. Missing data are imputed.

Sources

Source of exports and imports of merchandise data: World Trade Organization. Figures for total merchandise trade are largely derived from the IMF International Financial Statistics Database. The World Trade Organization obtains data on merchandise trade by origin, destination and product from: the Eurostat Comext Database of the European Commission (data available from http://epp.eurostat.ec.europa.eu/newxtweb/ mainxtnet.do); World Trade Atlas, the database of Global Trade Information Services (available from www.gtis.com/english/GTIS_WTA.html); COMTRADE, the United Nations Commodity Trade Statistics Database (available from http:// comtrade.un.org/db/); and other sources. Some inconsistencies are inevitable between sources in the aggregate export and import data of a particular country or territory. This is due to the use of different systems of recording trade, to the way in which IMF and the United Nations Statistics Division have converted data expressed in national currencies into dollars, and to revisions that can be more readily incorporated in the IMF data. Data obtained: 16 April 2013.

Source of imports and exports of services data: World Trade Organization and United Nations Conference on Trade and Development. Figures for imports and exports of services are mainly drawn from IMF Balance of Payments Statistics. For economies that do not report to IMF, data are drawn from national sources. Estimates for missing data are mainly based on national statistics. Figures on imports and exports of services by origin and destination are also derived from national statistics. Data obtained: 16 April 2013.

Source of intraregional exports and imports of merchandise data: COMTRADE. The United Nations Statistics Division receives reports of individual country values from countries and makes no adjustments. Data obtained: 3 September 2013.

 
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