The third quarter of this year was likely to be the defining moment in terms of whether the recovery in Asian production sector would be sustainable, Standard Chartered Bank said in its latest research report released over the weekend.

The resilience of Asian domestic demand should be seen as a positive, and this was in line with our view that Asia should continue to outperform developed economies in the years ahead, according to Tai Hui, Standard Chartered Bank's Regional Head of Research for Southeast Asia.

"Asia's overall export performance is still in ill health. Our calculations show that Asia's exports reverted to a 28.1 percent year on year contraction in May, or a 27.5 percent decline excluding China," said the report.

China's imports and exports continued falling year on year in June, but the pace of decline eased, Friday figures from China's General Administration of Customs revealed.

Chinese exports dropped 21.4 percent year on year to 95.41 billion US dollars, but the figure was up 7.5 percent from May. June imports totaled US$87.16 billion, down 13.2 percent year on year, but were up 15.6 percent from May.

Zhang Xiaoji, a researcher with China's State Council, or Cabinet, said that the weak foreign trade showed the world economy was still gloomy, adding that the situation was expected to get better in the second half as the government's stimulus efforts would take effect gradually.

Governments and central banks in Asia were in no hurry to reverse their fiscal and monetary stimulus measures. Private sector confidence, especially business investment, would be crucial for the economic recovery, said the report.

"If the second quarter of this year represented a turning point where investors saw economic deterioration change into economic stability, the next turning point will be when the stabilization transforms into a sustainable recovery," said the report.

(Xinhua News Agency July 13, 2009)