Asia Regional Integration Center

Economic growth slowed to 6.1% in 2019 from 6.7% in 2018. Increased special bond issuance by local governments led to moderating infrastructure investment growth in the first 3 quarters of 2019. However, consumption, the main driver of growth, decelerated due to the softening of both disposable income and consumption expenditure. Despite the reduction in value-added tax, both corporate profits and domestic demand softened, which led to a sharp decline in manufacturing investment. Net exports increased slightly, contributing 0.7% to GDP growth, as a phase-one agreement reached with the United States in mid-December 2019 brought a stop to new tariffs and reduced rates on some bilateral tariffs imposed earlier. The wide impact of COVID-19 on the economy will drive growth down to 2.3% in 2020, bouncing back to 7.3% in 2021.