The Impact of Trade Conflict on Developing Asia
The Asian Development Bank released a paper examining the current trade conflict using the ADB’s Multiregional Input-Output Tables a rich dataset capturing international input–output linkages. It incorporates the strong trade and production links within developing Asia and between the region and the rest of the world, which is important given that trade in intermediate products and capital goods comprise 81% of developing Asia’s total trade in 2017.
The paper is divided into five sections: Section 1 discusses the chronology of the 2018 trade conflict. Section 2 describes data and methodology, and how it compares to other recent models in the literature. Section 3 reports the main findings and provides estimates of the impact on the region’s trade and current account balances in 2018 and 2019. Section 4 performs some sensitivity analysis around the estimates and considers extensions and caveats of the methodology, such as the timing effects, uncertainty regarding the amount of trade redirection, and rebalancing of supply and demand in labor and other markets. Section 5 summarizes with a few concluding remarks.
Source: Asian Development Bank