This photo shows a view of Lujiazui Financial District in Pudong, Shanghai. (JOHANNES EISELE / AFP)
SYDNEY - Improving domestic conditions, along with a pipeline of large scale infrastructure initiatives, will see Asia driving global growth in 2018, Deloitte Access Economics in Australia said in a new report released on Tuesday.
While the recently imposed tariffs on steel and aluminium pose a number of possible risks to the global economy, the firm's lead partner Stephen Smith warned that people should not be "mesmerised" by Washington's controversial policy.
China's Belt and Road Initiative...will be vital in boosting productivity in Asia
Xu Sitao, economist, Deloitte China
"Global financial conditions remain accommodative and capital flows in emerging and developing economies have returned," he said.
"The global economy seems set for a new investment cycle, which will bolster the rebound."
Central to the success of the region will be the performance of China.
According to the report, countries like Australia could face significant challenges "if exposed to downside risks from China."
"Importantly, however, our baseline scenario is for China to continue its impressive performance," Smith said.
Although emerging consumer markets across Asia are predicted to make up a large part of the world's growth, a number of infrastructure projects throughout the region will play a massive role.
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Deloitte China economist Xu Sitao said China's Belt and Road Initiative, which aims to improve land and sea trading routes across the world, will be vital in boosting productivity in Asia.
"Even though it's in its early stages, a number of infrastructure deals have already been signed under the initiative," Xu said.
"It will create jobs and business opportunities across the region in the short term, as well as improve the movement of goods across economies and support business productivity in the long term."