TOKYO: Asia and the Pacific’s trade is expected to decelerate further in 2019 amid slowing global economic growth, said the Asian Development Bank (ADB) in its latest report on the region, titled ‘Asian Economic Integration Report 2019/2020 (AEIR): Demographic Change, Productivity, and the Role of Technology’.
“In 2018, Asia’s trade (by volume) grew by 4.0%, slower than the 7.3% growth in 2017. This came in tandem with the slowdown in global trade growth from 4.6% to 3.0%. Continued trade tensions and a weakening of global demand pose key downside risks to the region’s trade and growth outlook,” the report said.
According to the report, the region’s global value chain participation increased further in 2018, as Asia’s share of intraregional trade by value remained a robust 57.5% of global trade in 2018, up from the average of 56.3% in 2012–2017.
The report notes that ongoing trade frictions between the United States (US) and China since early 2018 are affecting global and regional trade growth.
“China’s imports from the US declined 31.0% (year-on-year) in the second half of 2018, particularly among the sectors affected by the tariff hikes such as soybeans and other agricultural products, while US imports from China fell 12.6% for the first 8 months of 2019,” the report said.
According to the report, inward foreign direct investment to Asia continues to grow despite a decline in the world’s total inward FDI.
“Estimates of global inward foreign direct investment (FDI) in 2018 was $1.3 trillion, a 13.4% contraction from $1.5 trillion in 2017. In contrast, inward FDI to Asia rose by 6.3% to $559.7 billion in 2018. Intraregional investment linkages also strengthened in 2018, rising 2.8% from $262.7 billion in 2017,” the report states.
On the other hand, according to the ADB, Asia’s share of the world’s total outward FDI rose to 49.4%, its highest thus far. “Over the years, Asia has cemented its status as a major international investor. Japan became the top source of global FDI with $143 billion invested in 2018.”