The Asian Development Bank said in a report that growth in the 45 countries of developing Asia would slow from 5.9% in 2018 to 5.4% in 2019, then recover to 5.5% in 2020. The forecasts reflect “gloomier prospects for international trade” partly due to escalation US-China trade tensions, slowdown in advanced economies and the larger economies of developing Asia.
ADB Chief Economist Yasuyuki Sawada warned: “the PRC–US trade conflict could well persist into 2020 while major global economies may struggle even more than we currently anticipate. In Asia, weakening trade momentum and declining investment are the major concerns”.
The report also noted that an escalation and broadening of the US-China trade conflict may reshape supply chains in the region. There is already evidence of trade redirection from China toward other economies in developing Asia such as Vietnam and Bangladesh. Foreign direct investment is following a similar pattern.
