Exports, especially apparel and leather goods, will contribute 0.23% to gross domestic products (GDP) of Bangladesh if the ongoing trade conflicts between the US and Chain escalates.
However, the developing Asia’s GDP will fall 0.67% due to the trade war, in which China will be the worst loser with a 1.25% slump.
The US and Japan’s GDP will also slide 0.27% and 0.19% respectively because of the war.
The Asian Development Bank, the regional lender, came up with the forecast in its flagship report on Asian Development Outlook 2019 released yesterday.
AS per the forecast, Vietnam will reap the highest benefits and its GDP is expected to gain by 2.31%, while that of Malaysia by 0.59% and Thailand by 0.30%.
“Trade redirection is already evident in H1 2019 and will continue if the trade conflicts persist or escalate. World GDP will hit by a 0.28% fall caused by the trade war and China is the biggest loser,” said Soon Chan Hong, senior economist (South Asia department) at the ADB Dhaka office Bank, in his keynote presentation in Dhaka on the day.
In the present scenario, Southeast Asian economies are set to gain the most, particularly in machinery, electronics, and garment.
In “worse-case” scenario which adds bilateral escalation, and a trade war in auto and auto parts between the US and China, three countries Vietnam, Malaysia, and Thailand would be the biggest winners, largely from redirected electronics, transport equipment, and machinery trade, he added.
Bangladesh and Vietnam would gain mostly from garment and leather trade. In the case of Bangladesh, around 90% of the gains would be from the apparel and leather goods.
How to gain from the escalation
The ADB has put emphasis on trade liberalization, attracting FDI and product diversification.
“From the trade conflict, Vietnam has gain the most as it has a diversified products baskets, while they have landed a huge amount of FDI relocated from the China,” Manmohan Parkash.
In capitalizing the opportunity, Bangladesh has to attract FDI in manufacturing and labour incentive sector, which would absorb the labour force, said Parkash.