Rising Asian exports to the EU give more evidence of a recovery, even though EU nations haven’t yet published the corresponding import data, and could help Asia deal with rising interest rates later in the year.

Asian export data out a month ahead of EU data

“EU / Asian export and import data are about one month ahead of EU data,” writes Societe Generale analyst Klaus Baader, explaining that Asian countries simply report much faster than we’re used to in the West. South Korea, for instance, reported December 2013 trade data on January 1, 2014. “Asia trade data can provide exceedingly timely information about not only the state of global trade, and hence the global economy, but also various parts thereof.”

asian exports to EU 1 0114

asian exports to EU 2 0114

While there was an end of the year slump in trade between the EU and some Asian economies, the overall trend is far healthier than it was at the beginning of 2013. Part of Japan’s rapid growth is an artifact of the depreciating yen, but exchange rates don’t explain away all of growth in Japan/EU trade.

Baader doesn’t have an explanation for why South Korean exports haven’t benefited as much as the rest of the region, but he guesses it could have something to do with the country’s price competitiveness. He also expects good things from Singapore soon. “Developments in Singapore’s trade with the EU stand out, but, looking at the level data, growth rates look set to surge in Q1,” Baader writes.

Asian export growth could help face rising rates

Strength in export growth is especially important now that Asian economies have to deal with the specter of rising interest rates as the Fed slowly tapers QE.

“For many parts of Asia, the stabilization and gathering recovery in the EU, even if muted, is an important counterweight to rising interest rates, going some way towards stabilizing growth in these economies,” writes Baader.

Investors have been extremely wary of emerging markets with high current account deficits, and there have been concerns that Fed actions could send the hot money racing back out of some EM countries as happened last summer. If exports can shrink he current account deficits, the threat of capital flight should be less acute.