Transcribed
Trade shares of ASEAN countries' major trading partners
1.2.2 Trade shares of ASEAN countries' major trading partners India United States ASEAN Euro area Rest of the world Japan People's Republic of China % 100- 80- 60- 40- 20- 1993 1996 1999 2002 2005 2008 2011 1990 ASEAN = Association of Southeast Aslan Nations. Source: UN Comtrade (accessed 4 March 2013).
Trade shares of ASEAN countries' major trading partners
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Rapidly increasing trade within developing Asia reflects the heavy involvement of ASEAN countries in global value chains, which has made them important parts of the global factory. In the production o...
f durable goods such as electronics, most ASEAN economies occupy the middle reaches of value
chains, where they specialize in processing intermediate goods
(Ma and Van Assche 2012). The processed intermediate goods
are exported to countries such as the PRC and Thailand, which specialize in the downstream assembly of final durable goods that are eventually shipped for final sale in Europe and the US. Given weak demand in these latter markets, higher trade within Asia can support export demand in ASEAN countries only temporarily.
Nevertheless, economic ties between ASEAN and other countries in Asia have grown rapidly in the first decade of this century. The PRC is now ASEAN’s most important single trading partner. India may not be grown significantly more important in recent years and now provides a share of export demand for ASEAN that is no longer negligible. The share of exports from ASEAN to the PRC and India increased rapidly in the 2000s, marking stronger economic ties (Figure 1.2.2).
Deepening economic ties between ASEAN and the two giants of developing Asia propel greater synchronization of business cycles. Thus, events in the PRC and India will more directly affect economic activity in the ASEAN countries.
Slower growth in either the PRC or India, for example, could be a drag on output growth in ASEAN. In other words, a shock in either of the giants will likely have spillover implications for ASEAN.
Although the PRC and India are still achieving enviable GDP growth rates, their pace of expansion is now projected to be slower than that achieved during the high growth years preceding the global financial crisis. Output in the two economies will therefore tend to be lower than what it would be if GDP grew at historical rates. Closer economic ties will mean slowdown in the PRC and India will have greater implications for ASEAN’s growth outlook.
ASEAN = Association of Southeast Asian Nations.
Source: UN Comtrade (accessed 4 March 2013).
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