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Asia will feel the weight of economic adjustments in China and the US, warns Asian banking giant HSBC. Addressing the local business community in Sri Lanka, HSBC’s chief economist for the Asia Pacific region, Arup Raha said monetary adjustments in the US and China will set the stage for Asian growth direction over the short term.
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“Asian exports are already slowing and will slow further,” predicts Raha, against a slowing global economy.
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The slower export growth in Asia is linked to a slowing US economy.
“The US must grow at a slower rate to correct current account imbalances,” says Raha.
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The fiscal stimulus coming from a 4 percent US deficit has been contributing to an economic growth of around 3 percent first two quarters of this year.
But with the Federal Reserve continuing to tighten monetary policy, a slowdown is expected.
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Although US corporates have reduced their debt, US consumers are still heavily indebted, saving next to nothing.
The interest rates of the fed f