Will China's export growth bottom out by March?

February exports posted a strong yoy rebound that may soon lead to a steady rise.

March will most likely see weaker, single-digit growth, said CIMB, but only because of a strong year-ago base in 2012.

By 2Q12, however, the growth pace will pick up assuming the current external demand builds even more rather than sputtering out.

Here's more from CIMB:

China's exports rebounded 18.4% yoy last month US$115bn (smallest in a year), matching the low end of the 18-68% range forecast though well below consensus and our estimates of 31.1% and 40.8% respectively. china's macro data at the start of the year are largely distorted by seasonality, with an early Lunar New Year this year complicating matters. Nonetheless, 2M12 export growth of 7% yoy vs. 21% for the same period last year confirms the lagged impact of weaker global confidence on China's external sector. Despite a healthy rebound in exports of key trading partners, with shipments to the US up 22.6% yoy (Japan +27.3%, Korea +38.3%, ASEAN +31.6%), exports to the EU climbed a meager 2.2% last month.

Led by stronger new orders and production, we expect China's exports to rise to about US$160bn in Mar. But a high year-ago base (Mar 11: 36% yoy) will likely bring yoy growth down to 3-6%, pulling 1Q12 export growth to about 6% (1Q11: 26%). We are hopeful that the pace will gather from 2Q, if genuinely good macro news, especially from the US, continues. We are heartened by the strong rebound in Feb's PMI new export orders, up 4.2 pts to 51.1, the first expansion in seven months (>50), and the pick-up in outbound freight rates in Mar which points to stronger external demand. Further, a jump in processed trade imports (+32.1% yoy in Feb; -19.8% yoy in Jan) suggests stronger coming external demand. Hence, we raise our export growth forecast to 13% from 8%. Exports are likely to expand by a slower 8% in 1H12 (24.2% in 1H11) and around 17% in 2H12 (17.4% in 2H11).

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