The World Bank warned that a trade war between the US and China would hurt economies in Southeast Asia as they rely on exports for growth.
Many countries in the region would feel “knock-on effects” of rising tariffs because they are tied to supply chains that feed into Chinese exports, Sudhir Shetty, the World Bank’s chief economist for the East Asia and Pacific region, told reporters in Jakarta yesterday.
“A lot of those, although they might finally be assembled and put together and exported as Chinese products, are the result of a value chain that stretches across this region, particularly in some of the larger” Southeast Asian economies, he said.
“The success of this region is based on open trade,” he said. “It’s based on the development of these value chains that over the last decade or so have increasingly centered on China.”
The world’s two biggest economies have threatened to impose tariffs on each other’s exports, clouding the outlook for global trade and growth. Chinese President Xi Jinping (習近平) offered some conciliatory words this week, promising to open the country’s economy further, which defused some of the strain.
While some observers were skeptical of the substance, it was seen as a sign a negotiated settlement could be possible.
The impact of the tariffs would be felt greatest on the US and China, and growth in advanced economies, including the US, could slow, Shetty said.
Meanwhile, exports are already faltering in some economies with shipments falling in Malaysia and the Philippines in February from a year earlier.
The US Federal Reserve on Wednesday said the prospect of a trade war poses “downside risks” to the US economy, which otherwise is poised to grow at a solid pace.
While the Fed said the steep tariffs on steel and aluminum imports that US President Donald Trump imposed last month would not on their own have a significant effect, the possibility of “retaliatory trade actions by other countries” could be harmful.
In the minutes of a monetary policy meeting on March 20 to March 21, when the Fed raised the benchmark interest rate for the first time this year, the Fed also cited “other issues and uncertainties associated with trade policies” as risks to the outlook.
Business contacts in many of the Fed’s 12 regions reported concern about the tariffs, with the agriculture sector “feeling particularly vulnerable to retaliation,” the minutes said.
Despite the concern over trade policy, the discussions by the Fed’s policysetting Federal Open Market Committee at the first meeting chaired by Trump-pick Jerome Powell were mostly upbeat and indicated that the economy was expected to grow at a solid pace.
The recent tax cuts and budget agreement “were expected to provide a significant boost to output over the next few years,” the minutes said.
However, the Fed said that it would be difficult to quantify the impact of the tax cuts, because there is little experience with providing this type of fiscal stimulus in an economy already maxed out.
Additional reporting by AFP
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