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China topped Asia’s economic growth table in the first quarter of 2017, overtaking the Philippines and India. The 6.9 per cent year-on-year GDP increase lifted the whole region with other Asian countries’ exports boosted by sales to China.

Beijing’s recent financial tightening has thus prompted worries that China cooling again would knock growth elsewhere.

We don’t expect a hard landing, but enough to take the gloss off regionally. We’ve increased our 2017 growth forecast for China, but only to match last year’s 6.7 per cent. Much depends on how hard China’s central bank presses the brakes, but it seems unlikely it wants to derail growth entirely. With extra help from the fiscal side, 2018 growth could clock 6.7 per cent again.

It won’t be plain sailing for the region, though. The trade cycle still looks wobbly, despite recent data that reflected China’s acceleration and a big restocking bounce in electronics. Structurally, however, the export engine looks impaired.

Demand in the West appears to be shifting from goods towards services and trade liberalisation efforts seem stuck. Outright protectionism would add to the headaches.

Slowing trade would prove tricky for Japan. Like others Asian economies, it benefitted greatly from stronger exports. But softer shipments could quickly hit local demand again, raising the need for additional fiscal support. Growth could slump from 1.3 per cent this year to just 0.6 per cent in 2018, keeping the Bank of Japan on the offensive.

India’s full-year growth of 7.1 per cent should match last year’s, with 7.5 per cent possible in 2018. Reforms are making gradual headway and inflation is low. However, banks are saddled with non-performing loans, so lower rates don’t provide the usual boost to growth.

Australia is gradually rebalancing its economy away from the mining investment boom: we forecast 2.5 per cent growth this year and 3.2 per cent next. New Zealand will do even better: its terms of trade are near a 40-year high and local demand is booming. In both economies, underlying inflation seems to have bottomed and they are the region’s only major central banks likely to raise interest rates before 2019.

Korea has bounced back, with consumer confidence soaring and exports performing well. But despite an expected fiscal stimulus this year, it will likely slow again in 2018, weighed down by sluggish local demand. Taiwan also remains overly dependent on exports and vulnerable to any wobble in the global tech cycle.

Hong Kong, meanwhile, is proving surprisingly resilient but it may take time before finance, logistics, and tourism regain their former shine. Singapore is also adjusting to a world of sluggish growth.

Malaysia weathered last year’s currency slump well and could grow 4.6 per cent this year as private investment powers ahead. The Philippines’ growth is forecast at 6.5 per cent this year and next - even though the government has not yet met its ambitious infrastructure targets.

Asian debt is high and climbing, and productivity growth is low and falling. That’s hardly the key to sustained prosperity. Reforms need to accelerate, at the very least to build up defences for the day when trade stumbles again and Western interest rates really begin to move.

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