After years of looking to China as a source of growth, Southeast Asian countries are turning their attention back to the world’s largest economy on the other side of the Pacific Ocean.
Exports to the U.S. from all but one of the six largest economies in the Association of Southeast Asian Nations increased in the first quarter from a year earlier, according to the most recent data from the International Monetary Fund. Shipments to China declined in four of the countries in the same period.
The improvement in U.S. sales comes against the backdrop of a contraction in trade across East Asia, the manufacturing hub of the world. It also shows the U.S. — Asean’s largest trading partner as recently as 2007, but now ranked third behind China and Japan — is making a comeback as a key source of demand for Asian goods.
“The U.S. is one of the few places where demand is still growing,” Trinh Nguyen, a senior economist at Natixis SA in Hong Kong, said by phone. “The U.S. used to be the engine of growth in Asia, then it got sidelined by China and it’s now back.”
The stronger dollar is helping by making U.S. imports from Asia cheaper, while consumer spending is also holding up well.
Singapore’s exports to the U.S. climbed 10 percent in the first quarter from a year earlier, reflecting in part the strong demand for medicines and other pharmaceutical products produced by the city state, according to Song Seng Wun, an economist at CIMB Private Banking in Singapore. Vietnam’s shipments to the U.S. rose 21 percent in the period.
“Vietnam in particular has the appropriate product mix, they have lots of cheap consumer products including textiles,” he said by phone.
Trade with the U.S. underscores the importance of the Trans-Pacific Partnership, a 12-nation free-trade agreement that would include countries such as Japan, Canada and Australia to cover 40 percent of global trade. The TPP has been a centerpiece of President Barack Obama’s economic diplomacy in Asia, but doubts exist over whether the U.S. will ratify the pact.
The World Bank estimates that TPP could raise gross domestic product by an average of 1.1 percent in member countries by 2030.
The U.S. economy grew an annualized 0.8 percent in the first quarter, modest compared with China’s 6.7 percent year-on-year expansion. The U.S., however, still dominates in terms of spending: it imported $2.2 trillion worth of goods and services last year, compared with $1.6 trillion for China, according to IMF data.