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Trade-reliant Asia takes a beating this week over US, China tariff war

Our global trade dashboard reflects the pain rippling across regions as the world's two biggest economies continue sparring face-to-face

Michelle Jamrisko | Bloomberg 

US China trade war

Trade data took a beating this week — especially in Asia, where it really counts.

That, and the broader theme of global economic weakness prompted a dovish message that we heard from the European Central Bank and others around the world. It was a bit more difficult to read whether the Federal Reserve is ready to abandon policy tightening.

Here’s our weekly wrap of what’s going on in the world

Slow Ships

Trade-reliant was the biggest trade-war loser this week, with exports data for Japan, South Korea, and Singapore all taking a tumble and Hong Kong reporting economic growth halved in the fourth quarter. Our global trade dashboard reflects the pain rippling across regions as the world’s two biggest economies continue sparring face-to-face — mostly on bigger and more stubborn issues like currency manipulation and intellectual property. Markets cheered that they seemed to be drawing up some plans for a deal. Other crowds, including in Europe, are more preoccupied with the looming threat of U.S.-imposed auto tariffs on an already-ailing industry, even as Japan says they won’t be burned while they’re keeping up trade talks with the U.S. The Austrian chancellor said he thinks President “has it in for Germany” amid contentious EU talks.

How Dovish

Fed officials took us for a ride again, signalling the end of their balance sheet run-off in minutes released Wednesday while showing disagreement among themselves on whether a 2019 interest-rate hike was in order. Fixing their “dot plot” could help things. The ECB sounded far more dovish amid economic growth risks, as did Australian central bankers, and the Bank of Japan even floating the possibility of more stimulus if the yen keeps strengthening. In China, the question is not “if” but “which rate” on easing ahead. Actions spoke louder than words in Indonesia, where policymakers held their fire again after a tightening bonanza in 2018, and in Turkey, where the central bank took a baby step toward easing.

It’s Not Just Trade

Beyond the rocky exports data, Germany was a critical place to look this week as we judge just how bad the global demand picture looks. An investor confidence measure there improved for the fourth month, but Europe’s powerhouse also saw manufacturing shrink the most in six years. Meanwhile, Turkey’s probably in recession. For bright spots, you can take the glass-half-full approach with some steady growth signs out of Israel and Thailand, though the latter faces a big test with election drama through next month.

First Published: Fri, February 22 2019. 08:50 IST
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