Near-term economic outlook points to cautious optimism after sustained export recovery mainly supported economic growth in many Asia-Pacific countries in the second quarter of 2024.
“Steady economic performance is expected in the second half of 2024, conditional on favorable developments in major advanced and Asia-Pacific economies,” said the Asia-Pacific Quarterly Economic Update, prepared and published by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
The publication cited readings of the manufacturing Purchasing Managers’ Index for July 2024 slightly moderated from the June level, while inflation in the region is also on track to ease further.
“The extent to which recent fiscal and monetary stimulus measures and growth in the high-tech and green sectors will support the Chinese economy will also impact other regional economies,” it said.
“Internationally, if an economic ‘soft landing’ in the United States materializes and policy rate cuts follow market expectations, the combined effect of robust external demand and easing international financing conditions may further support economic growth in Asia-Pacific economies.”
The ESCAP publication said the escalation of trade and geopolitical tensions pose a major near-term risk.
It said the recent imposition of tariffs by the European Union on Chinese electric vehicles, a new round of United States tariff hikes on Chinese goods in August 2024, further deepening in China-United States technological decoupling, and potential tariffs by Asian countries on low-price Chinese products all point to additional frictions and fragmentation in global trade.
“A tit-for-tat trade war will take a heavy toll on regional value chains with impacts on exports, employment and workers’ earnings. Meanwhile, the upside risks to inflation remain as geopolitical tensions may again drive-up food and energy prices and international shipping costs, and lead to prolonged transport disruptions,” it added.
Economic growth in many economies of the region was mainly driven by merchandise exports with exports relatively solid in the second quarter amid recovery in global demand.
“Export performance of economies deeply integrated in regional value chains in the information and communications technology (ICT) sector also benefited from growing external demand for products relating to artificial intelligence,” the publication said.
In contrast to growing exports, retail sales growth moderated in many Asia-Pacific countries, with the exceptions of Kazakhstan and Malaysia, it added.
