ADB: No impact yet from trade dispute

MANILA: The Asian Development Bank said yesterday that an intensifying trade dispute between mainly the United States and China would not affect the economic outlook for Asia and the Pacific this year and in 2019.

In its Asian Development Outlook 2018 supplement, the Manila-based bank said it kept its forecasts of 6.0% growth for 2018 and 5.9% for 2019 for the 45 economies in Asia and the Pacific that make up developing Asia.

“Although rising trade tensions remain a concern for the region, protectionist trade measures implemented so far in 2018 have not significantly dented buoyant trade flows to and from developing Asia,” ADB chief economist Yasuyuki Sawada said in a statement.

But the bank warned that “the rise in protectionist trade measures from the US and countermeasures from (China) and other countries poses a clear downside risk to the outlook for developing Asia.”

“Tariffs imposed by July 15, 2018 are factored into the revised outlook, but the risk of further ratcheting up of protectionist measures could undermine consumer and business confidence and thus developing Asia’s growth prospects,” it said.

The ADB first released its 2018 outlook in April, when Washington had yet to introduce higher tariffs on a wide range of imports from China, leading to retaliatory measures from Beijing.

China’s economy is still forecast to grow by 6.6% this year and 6.4% in 2019, the bank said, noting that “the government’s efforts to rebalance growth toward domestic consumption remain on track.”

Hong Kong’s growth prospects for 2018, however, have been revised to 4.0% from the initial outlook in April of 3.2%, citing its “exceptionally strong growth” in the January-March 2018 period. Its 2019 growth forecast remains at 3.0%.

The forecast for the entire Central Asia subregion has also been changed from 4.0% to 4.2% for 2018, and from 4.2% to 4.3% for 2019, with the bank citing the “rise in global commodity prices and the related recovery in the Russia Federation.”

For Southeast Asian economies, the bank revised its 2018 outlook for Thailand from 4.0% to 4.2% based on the country’s first-quarter growth. On the other hand, it trimmed Indonesia’s prospects this year to 5.2% from the initial outlook of 5.3% “because export growth is expected to remain moderate.”

Growth prospects for the rest of the countries and sub-regions remain generally unchanged.

Meanwhile, the 2018 outlook supplement report revised the inflation projections for developing Asia to 2.8%, from the initial outlook of 2.9% for 2018, and to 2.7% from 2.9% for 2019 “as domestic factors help contain inflationary pressures.”

The ADB is funded by 67 economies globally, of which 48 are from Asia and the Pacific.