Rising trade tensions between the US and China pose a major threat to the economic outlook for the region. The impact of the measures announced so far by President Trump should be small, and will be largely offset by looser fiscal and monetary policy and weaker currencies. However, there is a risk that the situation escalates much further. In the event of a full-blown global trade war, a number of the region’s economies would be tipped into recession, while no part of the region would escape unscathed.
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