Export recovery continues to stutter

The region's exporters are still struggling. Although exports from Emerging Asia as a whole expanded at their fastest pace all year in June, this was mostly due to a recovery in China's exports, which have been distorted by over-invoicing in early 2013. For the rest of the region, export growth has remained almost flat this year, at rates that are very weak by past standards. This is perhaps unsurprising, given that the second quarter saw Japan's economy suffer a sales-tax induced slump and the euro-zone economy stall. We still expect the global recovery to resume in the second half of the year, which should support Asia's exports. Indeed, export growth has picked up in most Asian economies that have already reported July trade data, while the July PMIs suggested that export orders have improved. But any hopes for a strong export rebound are likely to be disappointed.