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Trade uncertainties for Asia continues in 2019

The Asian economy is expected to continue growing in 2019, albeit at a slower pace than in 2018. According to Nikkei Asian Review, with most economies showing no signs of overheating, interest rates will likely stay low to support economic growth. However, the threats of the US’s America First protectionist policies looms large.

Trade tensions mean that China and Japan, Asia’s two biggest economies, as well as others, face risks of a sharper slowdown. While the US-China summit in December saw a bilateral agreement on a temporary cease-fire trade, the US might still raise tariffs from 10 to 25 per cent on $200bn worth of imports from China and expand the duties to more than $500bn of imports, covering all US imports from China.

According to estimates by the Organization for Economic Cooperation and Development, this development would lower Chinese gross domestic product by as much as 1.4 per cent in 2019, including the impact of lower capital spending caused by anxiety over the uncertain outlook. If the US-China trade war causes a further slowdown in Chinese economy, it could trigger domestic financial uncertainty.

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