Goldman Cuts Growth Forecasts for Asia’s Four ‘Tiger’ Economies

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Goldman Sachs Group Inc. slashed growth forecasts for the “Asian Tigers” as their exposure to the world economy — once one of their greatest strengths — is now backfiring as global growth slows amid trade tensions.

“Besides their own domestic reforms, they all benefited enormously from the broader context of globalization and the rapid economic development of the Asia-Pacific region,” Goldman economists led by Andrew Tilton wrote in a report Thursday. “However, the same characteristics that helped them benefit on the upside have left them relatively more exposed to the recent slowdown in global growth.”

Analysts dubbed Hong Kong, Singapore, South Korea and Taiwan the “Asian Tigers” for their rapid, trade-driven growth in the 1980s and 1990s. While some economies could potentially benefit from trade diversion as suppliers move out of China, the windfall would most likely go to Southeast Asian countries that are connected by land routes to China — such as Vietnam — rather than to the tigers, according to Goldman.

Below is a summary of Goldman’s changes in economic growth and policy forecasts:

  • Hong Kong: Goldman expects gross domestic product to shrink 0.5% in the third quarter from a year earlier, as opposed to its earlier projection of 2.1% expansion. For full-year 2019, Goldman sees just 0.2% expansion. In addition to a weak global growth and trade environment, ongoing political protests have affected domestic demand, the economists wrote.
  • Singapore: Goldman lowered its forecast for 2019 GDP growth to 0.4% from a previous 1.1% projection. TheMonetary Authority of Singapore is likely to reduce the slope of its exchange-rate band — its primary monetary-policy tool — to 0.5% per year from the current 1% at its October meeting, and then to 0% in April 2020, according to the economists.
  • South Korea: Goldman sees the economy growing 1.9% this year, lower than the 2.2% it previously forecast. The firm now expects another 25-basis-point cut to the benchmark interest rate this year — most likely in October — in addition to July’s cut.
  • Taiwan: Taiwan’s 2019 GDP forecast was lowered to 2.3% from 2.4%, as the hit from the trade war is somewhat offset by a U.S. move to import more from Taiwan and less from China.

— With assistance by Cynthia Li

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