Tariffs imposed by the US government on China imports earlier this year are benefitting other regional trading partners, according to an analysis released by PwC on July 11.
PwC's July edition of Global Economy Watch says that US imports from China fell by around 15% year on year in the first quarter of 2019. This decline has resulted in opportunities for other regional trading partners. Imports to the US from a group of eight other Asian economies – Bangladesh, India, Indonesia, Malaysia, South Korea, Taiwan, Thailand and Vietnam – have grown by more than 16%, says the analysis.
“Economics can sometimes lag behind politics, but we are now seeing hard economic data of the impact of US-China tensions,” says Mike Jakeman, senior economist at PwC UK. “This has benefitted other economies in the region: if this trend continues it will contribute to faster economic growth in Vietnam, South Korea and Taiwan in particular.”
PwC's analysis also looks at concerns about the risk of another global recession, as trade tensions impact on business sentiment and demand for exports.
“Certainly, the outlook for the world's biggest economies is less bright than it was 18 months ago,” says Jakeman. “In early 2018 we witnessed the fastest and most synchronised growth since before the global financial crisis. Since then, the deepening of the trade conflict between the US and China, a series of stumbles in Europe and further struggles in slow-growing emerging markets have transformed sentiment among businesses and policymakers.”
He adds however, that slower growth in 2019 in each of the crucial markets of the US, China and the Eurozone is to be expected. “The US benefited from a one-off tax cut in 2018. The Chinese government continues to cool its economy very gradually, while the Eurozone is correcting after a couple of years of above-trend growth in 2016-17. That these three economies have cooled simultaneously has been alarming, but fundamentals remain strong,” says Jakeman.
To learn more, read the full report here.