Asia’s economic outlook seems a little less daunting as 2019 brings in the Year of the Pig. Last year was a perfect storm of trade tensions, rising US interest rates, China tightening funding and oil rising prices. Now Beijing and Washington are talking again with further tariff hikes suspended, the US Federal Reserve is ready to pause, China is easing again, and oil has plunged.

That Asia’s growth slipped only a decimal point to 4.9 per cent in 2018 shows that the direct toll on trade was still marginal. But the changed picture does not solve the region’s problems. Slowing global demand is affecting growth across Asia.

The big issue in 2018 was higher dollar funding costs and a soaring US currency. With Fed tightening nearly complete, that pressure will now ease, but it could yet impact Asian growth with a lag.

At the same time, with inflation remarkably subdued nearly everywhere and oil prices off the boil, only selective, further local tightening will be necessary.

China’s engine has been sputtering, with infrastructure and private spending falling. However, reduced company and household taxes should boost expenditure in 2019, leaving growth unchanged from last year’s 6.6 per cent.

Hong Kong – more exposed to climbing US interest rates and a cooling property market – might see momentum slow, as may Taiwan, weighed down by a weakening tech cycle.

India had a volatile 2018 but it benefits from cheaper oil and demand should stabilise once this year’s elections end uncertainty. After a dip, we see growth rising slightly to average 7.3 per cent this year. After record 8 per cent growth, Bangladesh should achieve 7.8 per cent in 2019.

Japan dipped in and out of growth in 2018 as weather disrupted economic activity. The overall annual expansion of almost 1 per cent should be repeated in 2019. Exports are cooling but consumers should spend ahead of October’s planned VAT rate increase – then hold back afterward, leaving negative growth.

Australia remains on a roll. Housing is seeing an orderly downturn but resilient job growth and strong service exports mean 2019’s growth should hold at 3 per cent. New Zealand is following closely, its unemployment rate at a decade low despite weakening business and consumer sentiment.

Korea’s growth will likely dip further below 3 per cent as exports and local construction cool but consumer expenditure and extra state spending should help.

The ASEAN nations have been resilient. Indonesia should grow by 5 per cent despite last year’s financial turbulence and this year’s election could bring reforms. The Philippines should still achieve 6 per cent, thanks to infrastructure work. Malaysia’s new government halted some infrastructure projects, but expansion elsewhere, including manufacturing for export, should produce 4.6 per cent growth.

Thailand’s growth exceeded 4 per cent for the first time since 2012 but it may retreat as the global trade cycle slows. Singapore could suffer too despite its robust services sector, cutting growth from 3.3 per cent to 2.5 per cent. But Vietnam should again be the best-performing major ASEAN economy, with 6.5 per cent growth.

So, a global trade cycle set to cool further will add to the trade tensions hurting Asia’s export growth and last year’s financial tightening will weigh on domestic demand. But the region should see few interest rate hikes while monetary and fiscal easing in China will lend support.

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