Full Report - Subregional Office for East and North-East Asia - escap

MACROECONOMIC PERFORMANCE AND POLICY CHALLENGES AT THE SUBREGIONAL LEVEL CHAPTER 2
Figure 2.3. Current account balance in selected East and North-East Asian economies, 2010-2012
10
5
0
Percentage of GDP
-5
-10
-15
-20
China
Hong Kong, China
Japan
Mongolia
Republic of Korea
-25
-30
-35
2010 2011 2012
Sources: ESCAP, based on national sources; and CEIC Data Company Limited. Available from http://ceicdata.com (accessed on 30 March 2013).
Note: Data for 2012 are estimates.
Net exports remain supportive but intraregional
trade growth weakens
The East and North-East Asian subregion currently
accounts for 24% of real merchandise trade globally.
In fact, it was the main growth driver of global
trade in 2011. Its trade surplus vis-à-vis the rest of
the world rose from $99 billion in 2011 to $102.5
billion in 2012. In China and the Republic of Korea,
exports accelerated more rapidly than imports, while
the reverse held true for Hong Kong, China; and
Japan. The contribution of net exports to growth
remained supportive, except in Japan which saw
a record trade shortfall as purchases of liquefied
natural gas and crude oil rose. In the Republic of
Korea the trade balance briefly fell into deficit early in
2012 as shipping exports slowed and semiconductor
prices kept declining, but then they recovered.
Trade among the subregion’s three main economies
(China, Japan and the Republic of Korea) fell
slightly in value terms from that of the previous
year. As a percentage of total exports, trade within
the subregion declined from 20% in the first half
of 2011 to 18.8% in the corresponding period in
2012; the reduced salience of intra-area exports
was particularly pronounced for Japan. Exports to
China, Japan’s top export market, fell by 6.1% in
the first half of the year, marking the first drop in
three consecutive first-half-year periods since 2009;
shipments dropped further by 12% in October
compared with the same month in the previous
year after a 15% fall in September, reflecting the
rise in antagonism over disputed islands. Sales to
economies in the subregion were equally significant
in Mongolia, at more than 94% of the total exports
of the country.
The balance of payments softened under these
conditions. The current account balance in Japan
recorded the smallest surplus in the second quarter,
on a seasonally adjusted basis, since 1996 when
time-consistent data were first collected. These
developments in turn dampened foreign exchange
accumulation, as well as the pace of nominal and
real exchange rate appreciation.
By the end of 2012, total official reserves of
economies in the subregion grew by less than 1%
to $5,118 billion compared with reserves held at the
end of 2011, whereas they had increased by 3.1%
in the second half of 2011.
Currencies of countries in the subregion
appreciate slightly against the dollar
The turmoil in Europe led to the flight of capital to
safety and had impacts on the subregion’s financial
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