Having Donald Trump as head of the world’s largest economy is bad news for China and other Asian countries, according to a new report by Oxford Economics.
The British think tank warned that the US might engage in less free trade and pursue protectionist economic policies that are harmful to countries such as China.
“Trump’s victory brings to the table prospects of increased protectionism and less offshoring, which is particularly negative for Asia,” it said.
“If implemented, as promised during his Presidential campaign (for example, 45% trade tariff on China, withdrawal from TPP and ending the offshoring act), this will have negative repercussions for Asia’s export-oriented manufacturing and services sectors.”
It pointed out that the MSCI Asia-ex Japan index – a regional equity index – is down 4% percent from its close on November 9 and that Asian currencies have depreciated across the board.
Oxford Economics also expects Asia’s real GDP growth to be slightly lower in the short-term. It expects China’s economy to grow 6.3 percent next year and reduced its forecast for the country’s exports.
“Some countries, like Vietnam, Bangladesh and India may benefit from the diversion of US imports from China. But other countries, like Japan, Hong Kong, South Korea and Taiwan, with close trade linkages with China, would suffer,” it said.
It has also lowered its annual US growth forecast for 2018 slightly to 1.9 percent, from 2 percent.