So this is the world the region faces. Given that, how well will its economies withstand the shocks from the global environment? What factors will shape their performance?
Stock markets around the world may be reaching new highs, but the economic and political outlook remains bleak. The global economy is starting to feel the impact of US President Donald Trump’s trade war. China’s economy appeared to stall in August, with consumer spending and investment weakening. Meanwhile, in the US, signs of a slowdown are emerging as leading indicators decline and labour demand softens. Conflicts in the Middle East and Ukraine continue, with a strong possibility of further shocks that could have global implications.
Upside surprises should not be ruled out. There may be a substantial policy stimulus in China that could revive the economy. Alternatively, capital spending in the US might surge further as Trump’s tax cuts and deregulation create new opportunities for profitable investment. However, for policymakers and businesses in our region, the wiser assumption is that the global economy will become more challenging over the next year or two.
