MANILA: Softer growth prospects for China and a weak recovery in major industrial economies are expected to push down economic growth in developing Asia to 5.7 percent this year and next, the Asian Development Bank (ADB) said yesterday.
The GDP of the region, made up of 45 countries, grew 5.9 percent last year.
China’s economic growth is seen moderating to 6.5 percent this year and 6.3 percent next year, compared with 6.9 percent last year, the ADB report said.
Slower exports, a falling labor supply and supply-side reforms are reshaping China’s economy toward more domestic consumption and a further reduction in excess industrial capacity, it said.
A “sharp slowdown” in real-
estate investment would be a “drag” on the second-largest economy in the world, the bank added, although it would be partly offset by consumption and green investment.
The ADB’s forecast matches the low end of Beijing’s 6.5 to 7 percent target for the year.
The report said that India would remain one of the fastest-growing major economies, while South Asia is forecast to post the most rapid growth among sub-regions.
India’s economy is seen expanding by 7.4 percent this year and 7.8 percent next year. Last year, it grew 7.6 percent on the back of strong public investment.
South Asia’s economic growth is projected to slightly dip to 6.9 percent this year, from 7 percent last year, but that is seen to accelerate to 7.3 percent next year.
Southeast Asia’s economy is set for stronger growth at 4.5 percent this year and 4.8 percent next year, up from 4.4 percent last year. The region will be led by its biggest economy, Indonesia, as it ramps up investment in infrastructure and implements policy reforms to spur private investment.
“[China’s] growth moderation and [an] uneven global recovery are weighing down overall growth in Asia,” ADB chief economist Wei Shang-jin said.
Still, the region would continue to contribute more than 60 percent of total global growth, he said.
Aggregate growth in the US, the euro area and Japan would stay at 1.8 percent this year and inch up to 1.9 percent next year, the report said.
It also cited a UN projection that growth in the region’s working-age population would be lower from last year to 2020 than in 2008-2014, and that demographic effect alone could depress developing Asia’s potential growth by 0.4 percentage points.
