Phase one trade deal could spur growth, benefit Asian financial markets in 2020, Credit Suisse says
- US-China trade deal would resolve ‘negative implications’ that have weighed on manufacturing, according to Credit Suisse’s John Woods
- Woods sees 2020 as a year of ‘resilience’ and constructive backdrop for Asian markets
A “phase one” trade deal between the US and China could spark a growth recovery in Asia in early 2020, easing a drag that has weighed on industrial production for much of this year, according to John Woods, Credit Suisse’s chief investment officer for Asia-Pacific.
Woods said the bank expects “moderate” global economic growth next year at a 2.5 per cent pace and financial markets are likely to benefit as industrial production recovers.
“I think a number of the drags on economic growth that we witnessed very very much in 2019 are diminishing,” he said. “A resolution of sorts to the trade dispute, which is pretty much anticipated and almost baked into the price, is likely to resolve some of the very negative implications for the manufacturing sector, which clearly impacted growth this year.”
Woods expects 2020 to be a year of “resilience” and foresees a constructive backdrop for Asian equities because of reduced trade tensions, more dovish central bank policies and indications of a “trough” in Asia’s economic downturn.
The firm, however, remains “cautiously constructive” given potential challenges next year, such as a polarising presidential election in the United States, increasing margin pressure and rising corporate debt.