ECONOMIES in developing Asia heavily exposed to the electronics sector could suffer disproportionately from the US-China trade war, economists tracking the region said.
“Electronics is more important to developing Asia compared to the rest of the world,” Abdul Abiad, director for Macroeconomic Research at the Asian Development Bank’s Economic Research and Regional Cooperation (ERRC) Department at the Asian Development Bank (ADB) said.
He was speaking at a forum jointly organized by the ASEAN Society of the Philippines and the Management Association of the Philippines (MAP) in Makati on Sept. 27.
Mr. Abiad noted that electronics make up more than half of the Philippines’ exports. According to the Philippine Statistics Authority, electronics accounted for 55.6% of export sales in July, up 2.9% year-on-year.
The region could also benefit from the trade tensions when manufacturers relocate to evade tariffs.
“On the whole, the trade conflict could potentially benefit the rest of developing Asia… It’s now more expensive… for US customers to buy goods from China,” Mr. Abiad said.
According to Park Cyn-Young, also a director at the Regional Cooperation and Integration Division of ADB’s ERRC, ASEAN’s share of the world’s exports grew to 7% in 2018 from 6% in 2006.
In the midst of a global slowdown, the ADB has trimmed its growth forecast for developing Asia, which includes 45 countries in the Asia and the Pacific, to 5.4% in 2019 from its initial forecast of 5.7%. For 2020, the regional lender expects such countries to grow 5.5%, down from their initial forecast of 5.6%.
ADB has likewise further scaled down its outlook on Philippine economic growth to 6% from its already downgated 6.2% outlook in July.
Despite the global headwinds, ADB country director for the Philippines Kelly Bird said Thursday that “reasons why Philippine economic growth is resilient (are)… very strong macroeconomic policy settings, lower inflation, with rather low national debt… and the policy setting in terms of central bank and fiscal setting are really sound.” — Luz Wendy T. Noble