Asia Outlook: Rate cuts and trade uncertainty

We expect economic growth across the region to remain subdued, with most economies set to record below-trend and below-consensus growth this year. While lower interest rates will provide some support to growth, this boost is likely to be offset by a combination of tighter fiscal policy and easing exports. Inflation is back to target across the region and is likely to remain low amid weak economic growth and stable food and energy price inflation. Asia’s easing cycle is now in full swing, and with growth set to struggle and inflation likely to stay low, we expect central banks to cut rates further over the coming months. US reciprocal tariffs, which we think will be in the region of around 10% for most countries, would not have a huge impact on Asia since they would leave non-US producers on a broadly level playing field. And if Trump also puts penal tariffs on US imports from China, producers in ASEAN may gain even more market share.