SINGAPORE (July 4): Asia’s economic growth is expected to continue to weaken against a backdrop of unresolved trade tensions, according to asset manager State Street Global Advisors (SSGA), the investment management arm of State Street Corporation.

In a mid-year outlook briefing on Thursday, SSGA says the continued decline will likely be on the back of slowing exports and soft domestic demand.

“Most Asian governments have fairly big room for fiscal stimulus efforts, but are concerned about overdoing it,” says Ng Kheng-Siang, SSGA’s Asia Pacific head of Fixed Income. “So unless there are additional fiscal stimuli introduced, regional economic growth is expected to soften progressively.”

As external conditions deteriorate, Asian currencies are also expected to weaken against the US dollar.

Meanwhile, Asian bonds are expected to turn in a mixed performance, due to weakening currencies and emerging market sentiments pertaining to the US-China trade disputes.

“A negative trade outcome will inevitably result in a negative effect on currencies, and this is expected amid a climate of uncertainty,” Ng says.

However, the way Ng sees it, emerging markets are likely to see continued growth trends.

This is especially true for emerging Asian markets, which are generally less volatile and more stable compared to other emerging markets in regions such as Latin America.