The trade war between the US and China has raised fears of a global economic downturn and heaped pressure on policymakers in Asia region and beyond to roll out more stimuli, Reuters has reported.
Growth indicators are likely to tumble in coming months as higher trade tariffs take their toll on global commerce and further dent business and consumer sentiment leading to job losses and delays in investment decisions. Some economists predict a world recession and a renewed race to the bottom on interest rates if trade tensions fail to ease at a Group of 20 summit in Japan at the end of this month, when US President Donald Trump and Xi Jinping of China may meet.
Factory activity has shrunk in Asian nations like China, Japan, South Korea, Malaysia and Taiwan. , came below expectations in Vietnam and improved slightly in the Philippines. Moreover, central banks in Australia and India are expected to cut rates this week, with others around the world seen following suit in coming weeks and months.
J.P. Morgan expects the US Federal Reserve to cut rates twice this year, a major change from its previous forecast that rates will stay on hold until the end of 2020.