Historically high food and energy prices are driving brisk exports in Southeast Asia's commodity-rich nations, though a slowing Chinese economy poses a risk to the region's growth. Malaysia's exports climbed 39% on the year in June to a monthly record of 146.1 billion ringgit ($32.7 billion), according to the latest government figures. Energy exports were especially robust, with liquefied natural gas 150% higher by value than a year earlier and crude oil up by 80%. Palm oil and palm oil-based agricultural products, the third-largest category, rose 52%. Russia's invasion of Ukraine triggered price surges for each of these products, fueling the all-time high. Indonesian exports jumped 41% in June to $26 billion. The country, the largest exporter of palm oil worldwide, had eased its export ban on the commodity imposed in April. Indonesia's mining industry doubled its exports last month, indicating that palm oil and energy drove the increase, similar to Malaysia. Thailand, a major exporter of farm products, reported Wednesday that overall exports rose by 12% in June. Agricultural products gained 25% that month, driven by heightened global demand to secure food supplies. In Singapore, exports of prepared or processed food climbed 48% in June. In contrast, resource-poor Japan reported a record trade deficit for the first half of the year. The East Asian country imports LNG and coal from Indonesia and Malaysia. The food and fuel export boon especially favors the 10-member Association of Southeast Asian Nations and promotes stable economic growth. Regional trade also benefits, as Malaysia's exports in June rose 72% to Singapore and 76% to Indonesia.
Despite concerns that inflation and monetary tightening by central banks will spark a global recession, ASEAN members are seen as having a lower risk of economic deterioration. The International Monetary Fund projected Tuesday that the five major ASEAN economies will grow collectively by 5.3% this year, unchanged from April's estimate. But the IMF downgraded the global growth outlook to 3.2%. Growth estimates were cut for the U.S., China and other large economies, underscoring the resilience of Southeast Asian counterparts. The Asian Development Bank last week upgraded its 2022 growth outlook for Southeast Asia to 5% from April's 4.9% forecast. The Regional Comprehensive Economic Partnership trade pact, which includes ASEAN members as well as Japan and China, took effect in January. More companies in Southeast Asia are expected to take advantage of the liberalized trade rules. Imports are growing sharply in Malaysia and Indonesia. One lingering concern is China, whose economy grew only 0.4% on the year in the second quarter. Many Southeast Asian countries count China as their biggest export market, and an underperforming economy there could impact the entire region. In June, Malaysia and Singapore saw exports to China rise by just 4%, signaling a slowdown. "We expect [Singapore's] non-oil domestic exports growth to ease to low-single-digit growth in the second half of the year," wrote Chua Hak Bin and Lee Ju Ye of Maybank Research. "The global trade outlook is dampened by the China slowdown, Russia-Ukraine war, and global monetary tightening." Weaker Chinese demand could send international energy and food prices sliding, along with Southeast Asia's brisk exports. The U.S. Federal Reserve sharply raised its benchmark interest rate again during Wednesday's policy meeting. Southeast Asian currencies have depreciated against the dollar, and another hefty American rate hike risks squeezing the value of the currencies further. A weaker currency typically boosts a country's exports. But the potential for capital flight from Southeast Asia is also present, which would hurt both the economy and trade.