THE trade war between the United States and China could undermine the strong economic growth prospects of Southeast Asian countries like the Philippines, according to the United Nations Conference on Trade and Development (Unctad).
In its Trade and Development Report (TDR), Unctad said Asean countries are poised to register high economic growth on the back of strong demand, rising private consumption and infrastructure investments, especially in the Philippines and Indonesia.
“But concerns are rising that these trends can be overshadowed by sluggishness in the global economy and the worsening of trade relations between the United States and China, both of which are key export markets for many countries in the region,” Unctad said.
Unctad said since 2010, Cambodia, Indonesia, Malaysia, Myanmar, the Philippines and Thailand posted steady high economic growth.
Growth in Indonesia, Unctad said, stood at 5.1 percent in 2017, and is officially estimated at 5.1 percent in the first quarter of 2018 as well.
Unctad said the effects of monetary tightening in the United States also threaten the sustainability of growth in the region.
“Combined with the effects of rising protectionism in the United States and possible responses, this could adversely impact growth, resulting in levels lower than initially predicted,” Unctad said.
Unctad said after posting GDP growth rates of 5.7 and 5.5 percent in 2016 and 2017, developing countries in Asia are expected to sustain that rate in 2018 as well.
The trade war between China and the US will likely cause China’s economic growth to slow to 6.7 percent this year, while India’s growth is expected to average 7 percent in 2018.
Growth in East Asia is expected to average 5.9 percent in 2018, while growth in Southeast Asia is expected to slow to 4.8 percent this year from 5.2 percent level recorded in 2017.
“Across Asia the problem is not so much a weakening of growth, as fear that interest rate increases and monetary tightening could trigger capital outflows, leading to financial and currency instability,” Unctad said.
The TDR analyzes current economic trends and major international policy issues and suggests ways to address them.
The 2018 report includes an examination of how economic power is being concentrated in a smaller number of big international firms and how this impacts the ability of developing countries to benefit from their participation in the international trading system, as well as to gain from new technologies and the digital revolution.
