| Hakim Hayat |
THE ASEAN+3 Macroeconomic Research Office (AMRO) in its monthly report has revised the region’s growth projections downward, in the wake of the escalation in the United States (US) trade tensions.
Citing the latest issue of the monthly update of the ASEAN+3 Regional Economic Outlook (AERO) – June 2019 released yesterday, AMRO said baseline growth has been cut from 5.1 per cent in early May to 4.9 per cent in 2019 and 2020.
The report added that in the event that an adverse trade scenario (25 per cent tariffs on US imports from China) was to materialise, growth would slow to 4.7 per cent in 2019 and 4.5 per cent in 2020.
Regional economies with greater global value chain participation oriented towards final demand outside the region would be more affected.
In financial markets, regional emerging markets continue to see positive net capital inflows, while regional equity markets have rebounded in tandem with global markets.
However, despite the Fed’s dovish stance, most regional currencies have depreciated on the back of concerns over the escalating trade tensions and the recent addition of several Asian countries to the US currency manipulation watchlist.
The downward shift in forecasts is underpinned by the sharp weakening in regional exports.
With the exception of Vietnam and the Philippines, export values contracted across the region, led by China and Japan.
China reported a decline in exports of 2.7 per cent year on year in April.
The downturn in export activity since October is reflected in the general deterioration in the region’s Purchasing Managers’ Index (PMI).