Sino-US Trade War Could Slow Regional Growth: ADB

Growth in developing Asia could slow for a second straight year in 2019 and lose further momentum in 2020, the Asian Development Bank (ADB) said on Wednesday, warning of rising economic risks from a bitter Sino-US trade war and a potentially disorderly Brexit.

Developing Asia, which groups 45 countries in the Asia-Pacific region, is expected to grow 5.7 percent this year, the ADB said in its Asian Development Outlook report, slowing from a projected 5.9 percent expansion in 2018 and 6.2 percent growth in 2017.

The 2019 forecast represents a slight downgrade from its December forecast of 5.8 percent. For 2020, the region is forecast to grow 5.6 percent, which would be the slowest since 2001.

“A drawn out or deteriorating trade conflict between the People’s Republic of China and the United States could undermine investment and growth in developing Asia”, Yasuyuki Sawada, ADB’s chief economist, said in a statement.

The lender also cited uncertainties stemming from US fiscal policy and a possible disorderly Brexit as risks to its outlook because they could slow growth in advanced economies and cloud the outlook for the world’s second largest economy.

“Though abrupt increases in U.S. interest rates appear to have ceased for the time being, policy makers must remain vigilant in these uncertain times,” Sawada said.

China’s economy will probably grow 6.3 percent this year, the ADB said, unchanged from its December projection, but slower than the country’s 6.6 percent expansion in 2018. Growth in the mainland is projected to cool further to 6.1 percent in 2020.

However, Sawada said in a briefing in Hong Kong that this slowdown appears to be part of a natural ‘structural shift’.

China has set its 2019 economic growth target at 6.0 to 6.5 percent.

As for Hong Kong, the bank lowered its GDP estimate for 2019 from 2.8, to 2.5 percent. Sawada said the local economy is particularly prone to global uncertainties, and a “sluggish growth of trade seems to be leading to the moderation of Hong Kong and China’s growth rate.” (Reuters/ RTHK)