00:00Mark Oswald is Chief Economist and Global Strategist at Investment Brokerist, ADM ISI.
00:06Great to see you again, Mark.
00:08So, a growth update in a year of oil shocks and rising interest rates.
00:13What surprised you in this report?
00:16Not a lot, really.
00:18I was surprised, perhaps the only surprise is they made a lot of the risks from a downturn in AI
00:26investment,
00:26while mentioning that without it, basically, trade in the region would be flat or even contracting,
00:38but didn't actually mention the fact that, obviously, energy imports in the region
00:42and, indeed, general energy trade has been heavily impaired,
00:48and it's the biggest importer of energy in the world.
00:51So, you know, saying that it's all about AI, actually, the trade story is not just about AI.
01:00It's also about the impact of high energy prices, which, particularly countries in Southeast Asia,
01:07the likes of the Thailands and the Vietnams, you know, they've had to basically cut back on their energy imports,
01:17both through, you know, because of availability problems and, obviously, because of high prices.
01:24And you've seen them also, as a result, rein in production in the manufacturing sector.
01:31So, overall, actually, you know, I would put a more positive spin on this than the World Bank has.
01:39So, Asia's growth story, not just an AI story.
01:43I get that, but let's talk about China.
01:45How exposed is China compared with its neighbours?
01:51I mean, China, obviously, has the strongest link in the whole of the processing chain for anything to do with
01:58manufacturing,
01:59but, above all, for things like semiconductors, anything, energy transition, there is a vulnerability there.
02:05There's no question about it.
02:08But, you know, is it more vulnerable than anywhere else in the world?
02:11You know, I think it could probably actually withstand a downturn caused by high interest rates
02:18and certainly would benefit from a fall in energy prices,
02:23and it's just as vulnerable as anybody else to a sudden spike higher in energy prices.
02:31So, take AI out, consider what's going on with energy imports and exports,
02:38and the World Bank says trade across the region is weak or falling.
02:43What does that tell us about the rest of the East Asian economy?
02:47Yeah, well, that's the issue I take care of.
02:51That's their statement which I take issue with because of the energy side of the equation.
02:58It basically says that a lot of those economies are very much dependent on that.
03:03But when one's looking at the actual numbers, you know, for Q3,
03:07we're talking about most of these economies, with the exception of South Korea,
03:11which is a fairly mature economy, growing at 5% plus.
03:15The forecast for Taiwan is 11%.
03:17At some point, that has to actually come back, you know, come back with a bit of a bump.
03:22You know, it's inevitable.
03:24And I still think there's a lot of growth in intra-Asian trade,
03:28which remains probably the most encouraging part for the whole of the Asian region.
03:35Mark Oswald, always a pleasure talking to you.
03:38Thank you very much for your insight.
