The IMF has cut its growth predictions for Asia-Pacific economies for this and next year because of headwinds from policy uncertainty, trade disputes and weakness in major trading partners.
Regional GDP is expected to increase by 5pc this year and 5.1pc in 2020, the IMF said in its Regional Economic Outlook. This is down by 0.4 and 0.3 percentage points respectively from the predictions in the IMF's World Economic Outlook in April. The growth predictions, if borne out, will be the slowest since the 2008 global financial crisis, but maintain Asia's position as the world's fastest-growing major region.
A marked fall in merchandise trade and investment because of "distortionary trade measures" and an uncertain policy environment is weighing on activity, particularly in manufacturing, the IMF said. Notable risks include any deepening of US-China trade tensions or rise in oil prices, a faster than expected slowdown in China and a downturn in relations between Japan and South Korea.
The IMF now forecasts China's GDP to increase by 6.1pc this year and 5.8pc next year, down by 0.2 and 0.3 percentage points respectively from its previous forecasts. The lower growth is the result of the import tariffs and other measures put in place under the country's trade dispute with the US. China last week announced third-quarter GDP growth at 6pc, the slowest since 1992.
Any breakthrough in US-China trade negotiations would provide some upside potential for the region, the IMF said. But it warned that "downside risks clearly predominate at this juncture".
The IMF this month reduced its forecasts for global GDP growth in 2019 by 0.2 percentage points to 3pc because of the US-China trade war. The IMF's forecasts are widely used in the modelling behind key oil demand projections, including the IEA's.
