Global Growth Rotation – A Positive for Asia
(3 min read)
A global growth rotation from China to the US this year leaves downside risks for the rest of Asia given trade flow patterns.
But with global trade starting the year strongly and Asian exports to the US gathering pace, we expect trade to broaden out rather than any significant export slowdown.
A wider US C/A deficit this year (4-5% of GDP) also indicates bigger surpluses in Asia.
The composition of global growth is changing. Versus the 0.4pp of last year’s global GDP growth attributed to China (from the 3.5% overall global contraction), this year is expected to be primarily US led. Consumption patterns are also shifting towards services versus last year’s goods-driven growth. For the manufacturing and export-driven economies in EM, the direction and structure of trade could materially alter this year’s overall growth performance. We examine what it means for Asia.
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