Policymakers across Southeast Asia are bracing for fallout from a US-China trade war, turning their focus on bolstering their domestic markets to cushion the blow.
Indonesian Minister of Finance Sri Mulyani Indrawati and Bank of Thailand Governor Veerathai Santiprabhob, who are attending a regional meeting of officials in Singapore, yesterday said the conflict would have global repercussions, even if the direct impact on Southeast Asia’s GDP might be minimal for now.
“The composition of our GDP is mostly fueled by consumption” and the government is aiming to boost investment to further diversify economic growth beyond exports, Indrawati said in an interview with Bloomberg Television’s Haslinda Amin.
The deteriorating trade relations between the US and China and prospects for further retaliation “is not going to serve the interests of both parties,” she added.
US President Donald Trump is attempting to upend the global trade framework, arguing that China’s trade practices are unfair, with alleged violations including intellectual property theft and export subsidies.
Indrawati, a former World Bank managing director, said those differences should be dealt with through the WTO rather than erecting tariff barriers.
China is the biggest trading partner for many Southeast Asian economies and an important source of investment and tourism in the region.
While large domestic markets in Indonesia and the Philippines help to shelter those economies from a trade war, other economies in the region, like Singapore, Malaysia and Thailand, are more reliant on exports.
Indrawati said she was still optimistic that Indonesia would meet its GDP growth target for this year of 5.4 percent, a slight increase from 5.1 percent last year.
Veerathai said in a separate Bloomberg Television interview that the US-China trade developments are “definitely something we have to monitor very closely” and that retaliatory actions are of great concern, but that so far “the direct impacts have been quite small.”
The Thai central bank has been trying to manage the baht’s appreciation so it does not undermine the competitiveness of exports as the trade environment becomes more challenging. At the same time, it has to avoid being singled out by the US as a possible currency manipulator.
“As the central bank, we have to step in to ensure that the pace of appreciation is not damaging the economy as a whole,” Veerathai said. “We have to be careful on the impact of currency movement, in terms of volatility and the pace of appreciation on the real sector.”
Malaysia is seeking an exemption from US tariffs on steel and aluminum shipments and to gain clarity on solar-based equipment penalties, Malaysian Minister of International Trade and Industry Mustapa Mohamed told parliament yesterday.
The Malaysian government has requested to meet with US trade representatives on April 17 to sort out a deal.
Elsewhere in Asia, authorities are also worried about the impact on their economies.
Hong Kong Financial Secretary Paul Chan (陳茂波) on Wednesday wrote in a blogpost that the disputes would “inevitably impede relevant trade activities” and could also negatively affect Hong Kong’s economy.
Last year, China’s exports to the US that were routed through Hong Kong represented about 7 percent of the territory’s exports, he said.
World Bank managing director and chief financial officer Joaquim Levy said he was optimistic that the trade disputes would be resolved.
“At the end, people see that there are many ways to get to a win-win situation, so we are confident it will prevail,” he said in a Bloomberg Television interview yesterday. “There is so much scope, because trade is something that usually expands your frontiers, so that is the natural way where things should gravitate.”
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by