Trade war impact main focus at meet
PORT MORESBY: There’s no escaping the impact of the United States-China trade war, even for countries that stand to benefit from it in the short term, said Asia-Pacific Economic Cooperation (Apec) secretariat executive director Alan Bollard.
“The models show a certain amount of trade diverts out of China to Northeast Asia or Southeast Asia,” said Bollard.
“So they get positives in the short term. But in the medium term, there’s a significant impact from uncertainty and from trade distortion, so things getting produced in more expensive locations than they otherwise would be.”
Finance officials from the 21 Apec countries gathering here this week will discuss the outlook for the region against the backdrop of financial market volatility and a deepening China-US trade war.
Last week’s meeting of finance chiefs in Bali hammered home the message that simmering trade tensions are denting global growth and need to be resolved.
There is some optimism, with Apec expecting that there won’t be an escalation in the trade war and that the impact will be small as domestic demand remains robust.
“We’ve just been talking about economic forecasts and risks in the region and the region is still growing strongly,” said Bollard.
“Trade driver is playing a little bit less of a role and it’s more domestic demand drivers.”
Trade data in the fourth quarter would give more clues as to whether trade flows would remain resilient, he said.
“Trade flows have generally held up, but there is a possibility that what we are seeing is an increase in inventories,” said Bollard.
Buyers might be building up stock before they get hit by tariffs or might be concerned about availability of certain products, he said.