Escalating trade tensions between China and the U.S. have dampened prospects for developing Asia, with the region’s economy expected to grow slower than predicted this year and in 2020, the Asian Development Bank (ADB) said on Wednesday.
The Manila-based ADB scaled down its forecast for economic growth in developing Asia, which includes 45 countries in Asia and the Pacific, to 5.4 percent this year and 5.5 percent in 2020, down from 5.7 percent and 5.6 percent, respectively, as predicted in July.
The bank said in an update on its annual Asian Development Outlook report that the lowered forecasts “reflect gloomier prospects for international trade” due to the trade conflict between China and the U.S., as well as slowing growth in China, India, South Korea, and Thailand.
“The trade conflict between the U.S. and China could escalate further or even spread beyond trade and the two economies. “The risk of a deeper malaise in the global economy, and uncertainty on how policymakers around the world will respond to weaker global growth may stoke volatility in global financial markets,” ADB chief economist Yasuyuki Sawada said.
He added that weakening trade momentum and declining investments were also major risks to the outlook in developing Asia.