After a substantial slowdown this year, overall growth in Asia-Pacific will stabilize in 2020 even though China will continue to decelerate, predicts a new report from Oxford Economics.
In the report “Asia Pacific: Policy Levers Key to Growth in 2020 amid Slowing China,” the global forecasting and analysis service provider said the synchronized downturn witnessed in 2019 is “likely to give way to more diverse outcomes, and we think economies that push harder on macro policy levers will outperform the others.”
The report continued: “We don’t expect to see a meaningful de-escalation of the US-China trade war. And with Chinese policymakers preferring to manage the slowdown rather than use policy to reverse it, we expect China’s growth will slip below 6% in 2020.”
This doesn’t necessarily imply another year of decelerating external demand for APAC economies, though, said the report. “Following recent trends, we expect China’s import demand to continue rising through 2020 after a sharp fall earlier in 2019.”
Still, trade tensions are likely to keep the external environment challenging and the onus will remain on domestic demand to drive growth. “With the policy space that many economies enjoy, we expect authorities to continue to spur demand by pushing both monetary and fiscal levers, albeit to varying degrees,” it continued.
“We forecast a growth turnaround in economies where policy makers have been quick to jump aboard the easing train and have a willingness to ease further, such as India and Philippines.
“In Hong Kong, though, continuing civil unrest is likely to lead to a second year of recession, despite the expected roll out of further fiscal measures,” predicted the report.