Economic growth across Asia is set to slow more than expected, according to the latest projections by the International Monetary Fund. In its Regional Economic Outlook report released Wednesday, the IMF said growth in Asia could moderate to 5% in 2019, and 5.1% in 2020 — that’s 0.4% and 0.3% lower than its April projections.
Among the worst-hit major Asian economies projected to slow more than expected, Hong Kong — already battered by the months-long unrest — could grow 0.3% this year and 1.5% in 2020. That’s 2.4% and 1.5% lower, respectively, than the fund’s initial projections.
The city’s chief executive Carrie Lam said this month that Hong Kong has slipped into a technical recession. The report singled out the unrest in Hong Kong as one risk which could affect the region. “A deterioration of the sociopolitical situation, for example in Hong Kong … could have economic spillovers to other countries in the region and beyond.”
Growth in South Korea could fall to 2% this year and 2.2% in 2020 — both 0.6% less than predicted, according to the IMF report. Singapore’s economy could grow 0.5% this year and 1% in 2020 — lower by 1.8% and 1.4%, respectively, than projected.
Activity in the region, particularly in the manufacturing sector, has been hit. While domestic demand has held up, investment and trade have “weakened significantly,” with exports in Asian emerging markets shrinking since late 2018 — largely dragged down by weak regional trade especially with China, the report said.
Earlier this week, the fund had projected the Chinese economy could grow at 5.8% next year — slower than the 6.1% forecast for 2019.
“Risks within the region include a faster-than-expected slowdown in China, a deepening of regional tensions such as Japan’s and Korea’s bilateral relationship, rising geopolitical risks,” the IMF report said.
It flagged more external risks, such as deepening U.S.-China trade tensions, and a “disorderly Brexit” — with the latter now set for yet another delay.