Global markets started 2019 in the same way it ended 2018—in significant turbulence. In the U.S., the data show that the economy continued to expand at above trend in the third quarter of 2018, supporting job creation and bolstering wage increases. Although the U.S. Fed tightened monetary policy, it is expecting weaker growth in 2019. In the Eurozone, economic activity continues to moderate, with signs of a broad-based slowdown. In the United Kingdom, domestic demand remains subdued, with the near term outlook weighed down by considerable uncertainties over Brexit.

For the region, AMRO has revised the ASEAN+3 regional growth for 2018 downwards, and see greater uncertainty in the outlook for 2019. Japan’s growth moderated in 2018 and will likely slow further this year. Japan’s economic activity was affected by Typhoon Jebi in the third quarter of 2018 while uncertainties over the outlook for global trade discouraged business investment spending. In China, weaker domestic and external demand for goods going into the forth quarter of 2018 have raised concerns over the outlook for economic activity in 2019. Consistent with weaker factory output, the region’s exports decelerated sharply in November 2018. Exports slowed for Korea, Singapore, and contracted for Indonesia and Thailand.

In tandem with global markets, equities in the region exhibited volatility at the end of the year and in January. Although regional emerging markets (ASEAN-4, Korea and China) shed an average 1 percent in the second half of December 2018, China’s benchmark Shanghai Composite lost almost four percent.

Amid moderate growth performance with inflation starting to ease, some economies in the region have kept their interest rates on hold during their most recent policy meetings.

The Monthly Update of the ASEAN+3 Regional Economic Outlook (AREO) provides regular, short updates on regional economic developments, to supplement the annual AREO published in May each year. The Updates are published eight times a year, with the April and May editions incorporated into the annual AREO published in May, and the November and December editions into next year’s January Update (Special Edition).