Asian Development Bank: Tariffs meet Federal Reserve rate cuts, Asian economies welcome "encouraging relief"
Asian Development Bank Chief Economist Albert Park stated that the Federal Reserve's interest rate cuts will alleviate the tariff pressures faced by Asian economies. The Fed is expected to cut rates in September, helping to improve financial conditions and provide breathing room for loan repayments. Despite the fragile fiscal outlooks of Laos and the Maldives, the overall macroeconomic outlook for Asian economies remains positive. The ADB will release its latest Asian economic growth forecast this month, which is expected to be similar to the revisions made in July
According to the Zhitong Finance APP, Albert Park, Chief Economist of the Asian Development Bank (ADB), stated that the long-awaited interest rate cut by the Federal Reserve will bring welcome relief to Asian economies still grappling with the tariff plans of the Trump administration. The Federal Reserve is expected to cut interest rates in September, following data showing a significant slowdown in U.S. non-farm employment growth in August, with the unemployment rate rising to its highest level since 2021. Park mentioned in an interview in Sydney on Monday that if the rate cut is implemented, it would "benefit the financial conditions in the region."
He stated, "This provides a bit of breathing room in terms of loan repayments. As the lagged effects of tariffs begin to manifest, the growth outlook for Asia next year has become slightly more uncertain."
Park pointed out that the fiscal outlook for Laos and the Maldives is weak, with debt levels "quite high," and interest rates on dollar-denominated loans continuing to rise. He also added that, overall, other Asian economies are "pragmatically managed," and the macroeconomic outlook is "good."
Park said, "These are two places we are closely monitoring." He also noted that the region's resilience to trade shocks has been "surprisingly strong" so far.
Park indicated that the ADB will release updated data on Asia's economic growth forecasts later this month, expecting the outlook to be roughly similar to the revisions made in July. In July, the ADB lowered its growth forecast for East Asia in 2025 from 4.4% to 4.3%, which, while still considered strong, highlights the impact of trade tensions and a tightening global environment on growth momentum.
According to ADB calculations, U.S. import tariffs on Asia are at historically high levels, averaging 27.8%, while the average tariff rate in the U.S. is 18.6%. Among these, tariffs on imports from China and India are higher, while most other Asian countries face tariffs ranging from 15% to 20%.
Park stated, "Given that many countries have similar tax rates, you won't see significant pressure for manufacturing to shift en masse. Therefore, this may help maintain stability in the export market, but ultimately, rising commodity prices will still reduce demand."
