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The ASEAN+3 Macroeconomic Research Office (AMRO), an economic think-tank, said in its latest report published on Wednesday, the economic growth in East Asia could be hit this year and the next by the looming US-China trade tensions, Reuters reports.

But the underlying fundamentals remain solid amid stronger consumption growth and growing intra-regional trade.

The region includes China, South Korea, Japan and the 10 countries in the Association of South East Asian Nations.

Key Highlights:

“After projected 5.3 percent growth in 2018, the region’s economies are expected to expand at a slower pace of 5.1 percent in 2019 and 5.0 percent in 2020.

Headline inflation in the region is forecast at 2.1 percent this year, from an estimated 2.0 percent last year, and ease to 1.9 percent in 2020

The region could lose 0.4 percentage points of growth over a two-year period if its adverse scenario – both the U.S. and China impose tariffs of 25 percent on all imports between the two countries – materializes.”

The ASEAN+3 Regional Economic Outlook 2019 report read: “The region will undoubtedly be tested amid growing headwinds from slowing global trade. Uncertainties surrounding trade remain high, and the risk of further escalation in trade tensions frictions cannot be discounted”.

“There is little room for complacency on the policy front, given that downside risks have become more pronounced”.