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Five Economic Charts to Watch in 2020: Asia Pacific

Economics

By Sara B. Potter, CFA  |  January 30, 2020

While trade tensions between the U.S. and China have eased, the economic impacts are still being felt across the Asia Pacific region. In addition, several countries are now dealing with disruptions from the spread of the deadly coronavirus and devastating Australia bushfires. The charts below provide a glimpse into what is happening across a few key economies.

Will the Coronavirus Impact China’s Economy?

The Chinese economy slowed dramatically in 2019, registering just 6.1% growth after expanding by 6.8% in 2018. With the outbreak of the deadly coronavirus striking during the Lunar New Year holiday, limitations on travel and entertainment are likely to have an impact on Q1 2020 consumption data, possibly dragging down GDP growth for the year. Analysts surveyed by FactSet are currently projecting that economic growth will slow to 5.9% in 2020 and 5.7% in 2021. The 2020 number may be revised lower if the economic disruption persists. A significant hit to GDP growth in the world’s second largest economy would reverberate across the global economy; this has been the fear hitting global equity markets in recent days.

China GDP projections

Weakening Consumer Sentiment Points to Slower Australian Economic Growth

Australian consumer sentiment, which trended lower throughout 2019, fell in January as a result of the bushfires devastating broad sections of the country. The Westpac-Melbourne Institute consumer sentiment index fell to 93.4 in January, down 1.7 points from the previous month and 6.2 points below the January 2019 reading. The fires are expected to hurt both consumer and business activity in the first quarter, dragging down GDP growth. The FactSet Economic Estimates consensus forecast shows that analysts now expect the economy to grow by 2.0% in 2020, 0.5 percentage point lower than the forecast just six months ago. Following the three interest rate cuts by the Reserve Bank of Australia (RBA) in 2019, analysts expect one more RBA rate cut in Q1 2020.

Australia consumer confidence

The Hong Kong Economy Continues to Lose Tourist Dollars

Last year domestic protests and global trade tensions weighed heavily on the Hong Kong economy. Hong Kong’s real GDP contracted by 2.9% in the third quarter compared to a year earlier, the first economic contraction in ten years. The loss of tourism spending is a key factor in the country’s economic woes. November 2019 tourism data shows a sharp drop in total visitor arrivals in Hong Kong, led by a plummet in travelers from mainland China. For the month, the total number of visitors was down 55.9% from a year ago, with visitors from mainland China down 58.4%. As we enter 2020, the country is now facing the negative economic impact of the spread of the coronavirus. The loss of tourism and consumption spending in response to efforts to contain the virus is likely to cause continued economic pain in Hong Kong.

Hong Kong tourism

Falling Japanese Exports Will Hit Fourth Quarter GDP

Japan’s exports fell for a thirteenth consecutive month in December on a year-over-year basis, led by a 14.9% drop in exports to the United States. For the year, total exports declined by 5.6%, reflecting lower exports to Japan’s two largest export markets, China (-7.6%) and the U.S. (-1.4%), as the U.S.-China trade war took its toll on the region. We won’t see preliminary 2019 GDP numbers for Japan for another two weeks, but the combination of weak exports and a pullback in consumer spending in the wake of the October 1 consumption tax hike are expected to hit the 4Q numbers hard. The consensus estimate from analysts surveyed by FactSet predicts a 3.0% (q/q annualized) contraction in the economy for the final quarter of 2019. Growth for the year is expected to be 1.0%, up from 2018’s 0.3% expansion.

Japan exports

ASEAN Countries Continue to Cut Interest Rates

Asian countries are heavily reliant on trade with China; therefore, the escalation of trade tensions between the U.S. and China last year posed a real threat to economies across the region. To help encourage growth, most ASEAN countries have been lowering interest rates. In fact, the Central Bank of Malaysia cut rates as recently as January 22, 2020. The International Monetary Fund’s January 2020 World Economic Outlook update indicates stable economic growth for the ASEAN-5 countries (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) in 2020. However, the organization has reduced the growth prospects for Indonesia and Thailand slightly, citing continued weakness in exports that is weighing on domestic demand.

ASEAN policy rates

 

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Sara Potter, CFA

Senior Content Specialist, Market Analysis

Ms. Sara Potter is Senior Content Specialist and Market Analyst at FactSet. In this role, she is in charge of thought leadership economic analysis and reports and a regular contributor to FactSet Insight where she provides commentary on a wide range of current market topics. Since joining in 1999, she has managed the economic database development team where she was responsible for the integration of third-party economic content as well as the development of FactSet Economics data. Ms. Potter is an active member of the FactSet Charity Committee which focuses on evaluating FactSet’s charitable event sponsorship and employee volunteerism programs. She earned an M.A. in International Economics and Finance from Brandeis University and holds a B.A. in Economics and French from Dartmouth College. She is a CFA charterholder.

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