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Basically, the shock was a loss of export demand from Asia and a drying up of capital inflows.
Fig. 4 Simulation results of export demand shocks (% change from base data).
Equations for other components of final demand for commodities include the specification of export demand and government demand.
To what extend the share can be increased depends on the degree of substitutability of the specific product (price elasticity of export demand σ i XD ).
As can be seen in Fig. 2, based on the moderate reduction in export demand in both scenarios, palm oil supply, demand for inputs and the related conversion of forest and peatland would also decline only moderately.4 Fig. 2 Simulation results of export demand shocks on the palm oil sector of Indonesia, all given in percentage changes.
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The identification of thresholds for export demand increases being approximately 10 times those of domestic demand increases reflects the fact approximately 90% of beef produced in the U.S. is consumed domestically.
The maintenance of high export demand also demonstrated again the low elasticity of demand for Germany's highly valued industrial equipment.
As the impact of policy measures fade in 2010, the pace of Asia's recovery will hinge on the recovery of global export demand and continued risk appetite.
Growth has slowed recently because of slumping export demand, but the economy has avoided recession.
Much of the weakness, particularly in Spain, is down to struggling firms in property and finance, which suggests that the credit crunch and the deflating house-price bubble are taking a broader toll.All this points to an economy that is faltering not because of slowing export demand but because European consumers are suddenly less willing to spend.
Banking giant HSBC Holdings said China's economic growth would slip to 7.2% in 2003 from a sizzling 8% last year because of weaker export demand and lower growth in government spending.
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