Headwinds for China but tailwinds for other Asian economies ― The effects of supply chain restructuring continue, but Trump poses risk to the whole of Asia ―

In the second half of 2024, there will likely be a disparity in economic performance between China and other Asian economies. The Chinese economy will slow down due to a deteriorating housing market and stagnant consumption. On the other hand, other Asian economies are expected to continue to recover, driven by 1) another surge in IT-related demand, 2) an increase in investment due to the relocation of production from China, and 3) the initiation of reductions in policy interest rates. In particular, Taiwan, South Korea, Vietnam, Thailand and Malaysia are highly dependent on exports and are expected to experience higher growth rates in 2024 than last year.

If Donald Trump regains the U.S. presidency, the Asian economy could be severely disrupted. Mr. Trump has vowed to adopt radical policies such as 60% tariffs on all goods imported from China. If implemented, it would likely reduce China's real GDP by 1.1%. Other Asian economies are expected to enjoy positive effects through the relocation of production bases from China. However, trade imbalances and other factors may lead to criticism of other Asian economies by Mr. Trump, and some sanctions may be imposed along with those on China.

In China, the effects of economic measures are limited, and the economy is expected to slow down again. We expect the real GDP growth in 2024 to be only +4.7% year-on-year. Significant downside risks remain, such as the deepening of the real estate recession and increased pressure from the United States on China.

In India, the economy will likely to continue to expand, particularly in the service sector. We expect GDP growth to remain high in FY2024, at +7.8% year on year. However, amid rising political risks, there are still many challenges in revitalizing the manufacturing sector, which is essential for sustained high growth.

PDF link(PDF:530KB)