By The Nation
The July edition of PwC’s Global Economy Watch said US imports from China fell by around 15 per cent year on year in the first quarter of 2019. This fall had, however, created opportunities for its regional trading partners, with imports to the US from a group of eight other Asian economies - Bangladesh, India, Indonesia, Malaysia, South Korea, Taiwan, Thailand and Vietnam - growing by more than 16 per cent.
Mike Jakeman, senior economist at PwC UK, says: “Economics can sometimes lag behind politics but we are now seeing hard economic data of the impact of US-China tensions.
“This has benefited other economies in the region and if this trend continues it will contribute to faster economic growth in Vietnam, South Korea and Taiwan in particular.
“Yet if your goal is to primarily tackle trade imbalances, then bilateral tariffs are an imperfect tool - import substitution can simply recreate the problem elsewhere.
“So, as a result of Vietnam becoming more competitive than China, the US’s trade deficit with Vietnam stood at $13.5bn in the first quarter, compared to $9.3bn in the same quarter a year ago.”
The July edition of Global Economy Watch also evaluates concerns about the risk of another global recession, as trade tensions impact on business sentiment and demand for exports.
Certainly, the outlook for the world's biggest economies is less bright than it was 18 months ago.
In early 2018 the global economy witnessed the fastest and most synchronised growth since before the global financial crisis but since then, the deepening of the trade conflict between the US and China, a series of stumbles in Europe and further struggles in slow-growing emerging markets have transformed sentiment among businesses and policymakers, Jakeman added.
“However, slower growth in 2019 in each of the crucial markets of the US, China and the Eurozone is to be expected.
“The US benefited from a one-off tax cut in 2018. The Chinese government continues to cool its economy very gradually, while the Eurozone is correcting after a couple of years of above-trend growth in 2016-17. That these three economies have cooled simultaneously has been alarming but fundamentals remain strong,” Jakeman said.