Trade conflicts, rising debt and the potential impact from rising interest rates in the U.S. will likely dampen growth in the coming year, the Asian Development Bank said in an update of its regional economic outlook report.
The Manila, Philippines-based regional lender said yesterday that it expects economic growth in Asia to remain at a robust 6.0 percent in 2018 but to slip to 5.8 percent next year.
China’s economy is expected to expand at a 6.6 percent annual pace this year but slow to 6.3 percent in 2019.
It cited looming financial and trade shocks as the biggest sources of potential trouble. If the U.S. economy shows signs of overheating, interest rate hikes by the Federal Reserve, including one expected today [Macau time] to take the benchmark rate to 2-2.25 percent, could disrupt currency markets and other capital flows, leading to problems with bad loans.
Overly high housing prices also are risks for China, Hong Kong, Malaysia and South Korea, the report said.
But it said the bigger threat comes from potential damage to supply chains caused by trade conflicts, especially between the U.S. and China.
President Donald Trump pushed ahead Monday with higher tariffs on USD200 billion of Chinese imports. Beijing retaliated by imposing penalties on $60 billion of U.S. goods.
China and the United States earlier imposed 25 percent tariffs on $50 billion of each other’s goods. Combined, the tariffs now cover nearly half the goods and services China sells America and nearly 60 percent of what the United States sells China.
The damage will be worse if Trump carries out threats to raise tariffs on virtually all products imported from China, said the ADB’s chief economist, Yasuyuki Sawada.
But fast-growing Asia is quickly becoming such a large market that expanding trade within the region can help offset lost exports to the U.S., he said. AP
No Comments