At ANZ, we have repeatedly stressed the pivotal role exports play in Asia's current economic cycle. Strong export activity is having a favourable feedback effect on profits and incomes, which in turn is helping growth broaden out to consumption and investment.
Although exports are important in any Asian economic cycle, it is especially so in the current environment.
The cycle began with multiple constraints including poor corporate profitability, high leverage and elevated unit labour costs. The sustained performance of exports was therefore critical to overcome these issues.
Up until this point progress has been good with both high-frequency indicators and gross domestic product data generally meeting or exceeding expectations.
Purchasing Mangers’ Index (PMI) figures moderately improved in Indonesia but remained in the contractionary zone of below 50.
At the pan-Asia level the fall in this sub-index was consistent with the drop in the new orders
for developed economies.