13 August 2018
Hong Kong: Cutting GDP forecast on trade war woes

Hong Kong GDP growth in 2Q was weaker than expected, which could be an early sign of the negative impact from the bilateral trade war between Mainland China and the US. The linked exchange rate system adds further pressure and the government must spend its big fiscal surplus to cushion the impact

GDP grew 3.5% YoY in 2Q18, as expected

The moderate but slower than expected growth in 2Q18, at 3.5% YoY in 2Q from 4.6% in 1Q, mainly came from consumption, which contributed 4.3 percentage points to growth- offset by the net trade deficit.

Investment was weak, growing only 0.4% YoY, indicating that high house prices have deterred further real estate development.

Asia week ahead: Bank Indonesia pauses tightening

So far so good, not much of an impact of the China-US trade war on Asian exports in July. But that's no reason to relax just yet - the trade war has just started. It will take a while for the impact to trickle down to the real economy and Asia won't be immune to this

More Chinese economic data for July

As expected, China’s July trade data showed little impact from the US-China trade war in the initial phase of $34bn of tariffs. The remaining economic data for July – industrial production, retail sales, fixed asset investment, and monetary indicators – is likely to reinforce the same message.

We increase our industrial production growth forecast to 6.4% year on year for July from the 6% in June on the back of firmer exports. Investment and monetary data will shed light on whether recent liberalisation measures in areas of financial securitisation and asset management have started showing results. 

Reading time around one minute

Good MornING Asia - 13 August 2018

So far so good, not much of an impact of the China-US trade war on Asian exports in July. But that's no reason to relax just yet - the trade war has just started. It will take a while for the impact to trickle down to the real economy and Asia won't be immune to this 

In this bundle