The global economy is being pulled and pushed in different directions. Whether it is the US’ trade spat with China or the fragility of China’s economy or the geopolitical stresses in the Middle East that are raising oil prices, the ups and downs of the news flow make it hard to discern the net impact. However, a close study of recent developments shows two opposing trends — the region will be hit hard by cyclical forces, but the structural prospects over the longer term are improving to the point where a new development surge is likely in Asean.

Things can only get worse

The bad news we discussed a month ago has worsened. The past week has seen a flurry of economic data that leaves little doubt that the global slowdown will persist. Global manufacturing activity, as measured by purchasing manager surveys, has fallen to its weakest level since 2012. Across developed economies, there is a consistent pattern of a dwindling pipeline of new business for manufacturers while business optimism has plunged to its worst ever level in the survey’s history; that means that things will get worse. Although services sectors in the US, Europe and Japan show continued expansion, there are several reasons why the outlook is for a worsening of economic conditions.

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