China: Merchandise exports increase at a slower pace in August
Merchandise exports climbed 7.1% in annual terms in August, on the heels of July’s 18.0% upturn and below market expectations. Moreover, adjusted for price changes, exports may have contracted in August. The reading is likely a reflection of slowing momentum in developed economies, as well as a global shift from goods consumption towards services spending now that Covid-19 restrictions have been lifted in most parts of the world. Meanwhile, merchandise imports were broadly stable, rising just 0.3% over the same month last year in August (July: +2.3% yoy) and indicative of soft domestic demand.
As a result, the merchandise trade balance deteriorated from the previous month, recording a USD 79.4 billion surplus in August (July 2022: USD 101.3 billion surplus; August 2021: USD 59.2 billion surplus). Lastly, the trend improved, with the 12-month trailing merchandise trade balance recording a USD 880.0 billion surplus in August, compared to the USD 859.8 billion surplus in July.
Giving their view on the export outlook, analysts at the EIU said:
“Slowing global growth will weigh on Chinese exports over the fourth quarter, although a gradual deceleration is more likely than a sudden collapse in external demand. […] Given our forecasts for soft landings in major Western markets, we expect a similarly benign trajectory for Chinese export growth, even as the overall external demand picture darkens by late 2022. […] Contractions in August across key import categories, such as raw materials, machinery and electrical components (which are important inputs for China’s export-bound industries), affirm our expectation of softer export momentum over the fourth quarter.”