MANILA -- Asia's growth prospects could suffer if the trade disputes between the U.S. and China continue to worsen, the Asian Development Bank said in a new report.
In its Asian Development Outlook Supplement, the ADB kept its earlier growth forecast for Developing Asia at 6% this year and 5.9% in 2019, saying most economies in the region are on track to meet expectations. Developing Asia covers 45 of the ADB's 67 member economies, which also include countries in Europe and North America.
The tariffs imposed by July 15 were taken into consideration in keeping to the previous forecast, but further actions could hurt the region, the ADB said. On July 6, the U.S. slapped tariffs on $34 billion worth of imports from China and the latter retaliated accordingly.
"The risk of further ratcheting up of protectionist measures could undermine consumer and business confidence and thus Developing Asia's growth prospects," the ADB said.
China, the region's largest economy, is still expected to grow at 6.6% in 2018 and 6.4% next year. China grew 6.8% in the first half of 2018, driven by consumer spending and robust investment in real estate and manufacturing. However, risks from its trade dispute and investment conflicts with the U.S. could dampen the country's growth prospects for the rest of 2018, the report said.
India is still expected to grow at 7.3% this year before accelerating to 7.6% in 2019, as reforms in the banking system are expected to boost private investment and the benefits from the goods and services tax start to kick in. Oil price hikes, however, pose a downside risk to India's growth, the ADB said.
Southeast Asia's growth outlook also remains at 5.2% this year and next. Indonesia, however, is forecast to grow at 5.2%, down from the 5.3% in the April forecast, as export growth is expected to remain moderate.
Thailand's growth forecast has been upgraded to 4.2% in 2018 from 4% previously, on account of a broad-based expansion in the first quarter, with consumption, investment and exports all expanding.