Asia: Regional slowdown continues – ABN AMRO
|Arjen van Dijkhuizen, senior economist at ABN AMRO, points out that real GDP growth in EM Asia slowed clearly over the past quarters, particularly since 2H18, falling from a cyclical high of 6.5% yoy in 1Q18 to just below 6% in 2H18 and to a post-global crisis low of 5.5% yoy in 1Q19.
Key Quotes
“In our view, the main trigger for this slowdown is the escalation of the US-China trade/tech conflict since the spring of 2018, although initially effects of previous global monetary tightening also played a role. So far, the US and China implemented tariffs over USD 360 bn in bilateral trade. The US has also taken or threatened with protectionist measures versus other countries.”
“These tensions have contributed to a global decline in cross-border investment in machinery and equipment, that went hand in hand with a slowdown in global trade. Not only China is feeling the impact of the conflict with the US, but also the rest of export-oriented Asia as the conflict has started to hit regional China-centered global supply chains.”
“The conflict did not only have negative effects on actual trade flows, but also contributed to a region-wide drop in business confidence, asset market corrections and a tightening of financial conditions.”
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