Hossen Sohel: Developing Asia could grow more slowly than previously thought next year as the US-China trade war inflicts collateral damage on the region’s export-reliant economies, the Asian Development Bank or ADB said yesterday, reports Reuters.
Tightening global liquidity could also weigh on business activity by pushing up borrowing costs, while capital outflows are also a risk.
The Manila-based institution kept its 2018 economic growth estimate for the region at 6.0 percent in an update of its Asian Development Outlook.
But it trimmed next year’s forecast to 5.8 percent from 5.9 percent.
“Downside risks to the outlook are intensifying”, said ADB Chief Economist Yasuyuki Sawada, pointing to the potential impact of US-Sino trade tensions on regional supply chains and the risk of sudden capital outflows if the Federal Reserve raises interest rates even more quickly.
The ADB’s 5.8 percent growth estimate for 2019 would be the slowest for the region – made up of 45 countries in the Asia-Pacific region – since it clocked a 4.9 percent growth in 2001.
The United States and China imposed fresh tariffs on each other’s goods on Monday as the world’s biggest economies showed no signs of backing down from an increasingly bitter trade dispute that is expected to hit global economic growth.
China’s economy is expected to grow 6.3 percent in 2019, the ADB said, slower than its 6.4 percent forecast in July and weaker than its 6.6 percent growth estimate for 2018, which was unchanged from its previous projection.
Beijing has set a growth target of around 6.5 percent this year, the same as last year, which it handily beat with an expansion of 6.9 percent.
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