Most Asian Economies Remain Under Pressure of US-China Trade Tension

Forex News

A further escalation of trade tensions between the US and China stays the main risk to the Asian economic growth forecast. Factory growth in Asia's major manufacturing hubs slowed last month amid rising global trade tensions. Economies in export-reliant Asia continued to benefit from a synchronized uptick in world growth, though Trump’s decision to impose tariffs on its largest trading partners have stoked uncertainty about the outlook and rattled financial markets.

Meanwhile, key Asia’s emerging markets (EM) faced with accelerating inflation and rising US dollar. Higher oil prices and strong US dollar have hammered emerging market currencies globally of late, with trade friction and heightened geopolitical uncertainties around North Korea, Iran and Italy adding to pressure.

China's private Caixin/Markit Manufacturing Purchasing Managers' index (PMI), which is a leading indicator of the state of China's manufacturing sector, was 51.1 in May, as in April, but the figure was slightly below the economists' forecast of 51.3.

The manufacturing sector in Japan continued to expand in May, albeit at a weaker pace, showed the latest Nikkei poll. The Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) dropped to 52.8 in May (a seven-month low), from 53.8 in April, with domestic business growth slowing and only a modest pick up seen in export orders.