The net effect of the US: not good but not all bad either
If recent events are a good indication, it is going to be a rough year for our region. The first measures announced by US President Trump augur poorly for the region. Despite China reporting 5% growth in 2024, facts on the ground still point to a troubled economy that is only recovering weakly. In addition, the region has seen bond yields rise, pushing up the cost of capital, while oil prices are also up around 10% so far this year, imposing a further cost burden on companies and consumers.
Taken separately, these challenges are not insurmountable. What is concerning is how they might confluence and amplify each other, which could pose significant challenges for Asia. Having said that, the region is not helpless in responding to a turbulent environment; it has many policy tools and can still emerge relatively better off than competing regions.
