September 26, 2018 / 1:32 AM / in 24 days

U.S.-China trade war dims Asia's 2019 growth outlook - ADB

    MANILA, Sept 26 (Reuters) - Developing Asia could grow more
slowly than previously thought next year as the U.S.-China trade
war inflicts collateral damage on the region's export-reliant
economies, the Asian Development Bank (ADB) said on Wednesday.
    Tightening global liquidity could also weigh on business
activity by pushing up borrowing costs, while capital outflows
are also a risk.
    The Manila-based institution kept its 2018 economic growth
estimate for the region at 6.0 percent in an update of its Asian
Development Outlook. But it trimmed next year's forecast to 5.8
percent from 5.9 percent. 
    "Downside risks to the outlook are intensifying", said ADB
Chief Economist Yasuyuki Sawada, pointing to the potential
impact of U.S-Sino trade tensions on regional supply chains and
the risk of sudden capital outflows if the Federal Reserve
raises interest rates even more quickly.
    The ADB's 5.8 percent growth estimate for 2019 would be the
slowest for the region - made up of 45 countries in the
Asia-Pacific region - since it clocked a 4.9 percent growth in
2001. 
    The United States and China imposed fresh tariffs on each
other's goods on Monday as the world's biggest economies showed
no signs of backing down from an increasingly bitter trade
dispute that is expected to hit global economic growth.

    China's economy is expected to grow 6.3 percent in 2019, the
ADB said, slower than its 6.4 percent forecast in July and
weaker than its 6.6 percent growth estimate for 2018, which was
unchanged from its previous projection. 
    Beijing has set a growth target of around 6.5 percent this
year, the same as last year, which it handily beat with an
expansion of 6.9 percent.
    South Asia is poised to remain as the fastest growing in the
region as the ADB maintained its growth estimates of 7.0 percent
for this year and 7.2 percent for next year.
    However, moderating export growth, quickening inflation, net
capital outflows and a worsening balance of payments dimmed the
growth outlook for Southeast Asia, with growth this year
projected to slow to 5.1 percent from the July forecast of 5.2
percent.
    "Policy makers have at their disposal an array of policy
tools with which to manage pockets of vulnerability and maintain
stability, but they must be applied carefully," Sawada said. 
    Inflation across the region is expected to remain under
control, helped by country-specific factors like moderate food
price inflation in India and China and fuel subsidies in
Indonesia and Malaysia, the ADB said. 
    It maintained this year's inflation projection at 2.8
percent but raised the forecast for next year to 2.8 percent
from 2.7 percent in July. 
    
    
 GDP GROWTH, pct                                               
 Subregion/Economy                                             
                                                               
 YEAR                  2017    2018    2018     2019     2019
                      ACTUAL  UPDATE   JULY    UPDATE    JULY
 Central Asia          4.3     4.1      4.2      4.2      4.3
 East Asia             6.3     6.0      6.0      5.7      5.8
 China                 6.9     6.6      6.6      6.3      6.4
                                                           
 South Asia            6.5     7.0      7.0      7.2      7.2
 India                 6.7     7.3      7.3      7.6      7.6
                                                           
 SEast Asia            5.2     5.1      5.2      5.2      5.2
 Indonesia             5.1     5.2      5.2      5.3      5.3
 Malaysia              5.9     5.0      5.3      4.8      5.0
 Myanmar               6.8     6.6      n/a      7.0      n/a
 Philippines           6.7     6.4      6.8      6.7      6.9
 Singapore             3.6     3.1      3.1      2.9      2.9
 Thailand              3.9     4.5      4.2      4.3      4.1
 Vietnam               6.8     6.9      7.1      6.8      6.8
                                                           
 The Pacific           2.4     1.1      2.2      3.1      3.0
 Developing Asia       6.1     6.0      6.0      5.8      5.9
                                                               
 INFLATION, pct                                                
 Subregion/Economy                                             
                                                               
 YEAR                  2017    2018    2018     2019     2019
 FORECASTS            ACTUAL  UPDATE   JULY    UPDATE    JULY
 Central Asia          9.2     8.4      8.7      7.7      8.1
 East Asia             1.6     2.1      2.1      2.1      2.1
 China                 1.6     2.2      2.2      2.2      2.1
                                                               
 South Asia            4.0     4.9      5.0      5.2      5.1
 India                 3.6     5.0      5.0      5.0      5.0
                                                               
 Southeast Asia        2.8     2.9      2.9      2.9      2.9
 Indonesia             3.8     3.4      3.6      3.5      3.7
 Malaysia              3.8     1.4      2.5      2.0      1.8
 Myanmar               4.0     6.2      n/a      6.0      n/a
 Philippines           2.9     5.0      4.3      4.0      3.9
 Singapore             0.6     0.7      0.9      1.4      1.4
 Thailand              0.7     1.3      1.3      1.4      1.4
 Vietnam               3.5     4.0      3.7      4.5      4.0
                                                               
 The Pacific           4.2     4.2      4.2      3.9      3.9
 Developing Asia       2.2     2.8      2.8      2.8      2.7
    
    

 (Reporting by Karen Lema and Enrico dela Cruz; Editing by Kim
Coghill)
  
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