Global Macro Service > Research Briefings > Asia Pacific

Policy levers key to growth in 2020 amid slowing China

After a substantial slowdown this year, we expect overall growth in Asia-Pacific will stabilise in 2020 even though we think China will continue to decelerate.

The synchronized downturn that we’ve witnessed in 2019 is likely to give way to more diverse outcomes, and we think economies that push harder on macro policy levers will outperform the others.

We don’t expect to see a meaningful de-escalation of the US-China trade war. And with Chinese policymakers preferring to manage the slowdown rather than use policy to reverse it, we expect China’s growth will slip below 6% in 2020.

This doesn’t necessarily imply another year of decelerating external demand for APAC economies, though. Following recent trends, we expect China’s import demand to continue rising through 2020 after a sharp fall earlier in 2019.

Still, trade tensions are likely to keep the external environment challenging and the onus will remain on domestic demand to drive growth. With the policy space that many economies enjoy, we expect authorities to continue to spur demand by pushing both monetary and fiscal levers, albeit to varying degrees.

We forecast a growth turnaround in economies where policy makers have been quick to jump aboard the easing train and have a willingness to ease further, such as India and Philippines.

In Hong Kong, though, continuing civil unrest is likely to lead to a second year of recession, despite the expected roll out of further fiscal measures.

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