The Asian Development Bank (ADB) has downgraded its growth forecasts for the region, saying escalating trade tensions are sapping economies of some of their potential.
The regional lender said in a report released yesterday that it expects regional growth of 5.4 percent this year and 5.5 percent next year, slightly below its earlier forecasts.
A further deterioration in the tariff dispute between China and the US poses risks that stretch beyond that conflict and beyond the region, the Manila-based bank said.
Asian economies logged 5.9 percent growth last year, but faltering exports and investment have sapped the region of some of its dynamism. Growth in wealthy, advanced economies has also flagged.
“Downside risks to the outlook have intensified” with repercussions beyond trade, the report said. “The conflict will likely persist at least into 2020 and could broaden to involve other regional economies.”
Beijing and Washington are scheduled to resume negotiations on their dispute over trade and technology policies next month after talks collapsed in May.
The trade conflict has hurt exports from industrializing countries in Asia that are suppliers to China of parts and other intermediate manufacturing materials, the report said.
For developing Asian countries, growth would remain at about 6 percent, it said.
“In spite of an overall slowing down of the Asian economies the growth rate still seems robust and stable,” ADB chief economist Yasuyuki Sawada said in an interview from Manila.
Uncertainties over global trade tensions could further destabilize financial markets, compounding other problems.
“We see rising private debt in developing Asia, corporate debt in China and consumer debt in South Korea, Malaysia and Thailand,” Sawada said.
However, he said he did not anticipate major financial shocks from outside the region and most regional central banks are in a position to adjust interest rates to help spur more lending to support growth.
The disruptions to trade and manufacturing from the clash between the US and China come at a time when the electronics sector is already hitting a soft spot, with demand for computer chips and other vital components waning.
Semiconductor sales are expected to fall by more than 13 percent this year from last year, the report cites the World Semiconductor Trade Statistics group as saying.
US efforts to keep Chinese telecoms giant Huawei Technologies Co (華為) from participating in the rollout of next-generation 5G networks and products is also slowing demand, with Taiwan and South Korea hit the hardest, it said.
However, the downturn appeared to be bottoming out, Sawada said, adding that if 5G networks are rolled out as expected next year, conditions would improve.
Overall, the ADB downgraded its forecasts for 17 regional economies that account for nearly all economic activity in the region. It kept 17 unchanged and increased growth estimates for 11, mainly in central Asia and the Pacific.
In an accompanying report, the ADB urged regional governments to do a better job of providing affordable housing and public transport to help support growth and improvements in living standards.
The housing to annual income ratio is as high as 17, compared with a more reasonable benchmark of 4, Sawada said.
The poor suffer disproportionately from inefficient public transport and long commutes from distant suburbs.
“Housing affordability is a big issue, but it’s one critical issue across a broader landscape,” Sawada said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to