Asian Bank cuts growth forecastArchive
MANILA: The Asian Development Bank (ADB) on Thursday trimmed its growth forecasts for China and developing Asia this year and next owing to weakness in the world’s number two economy.
However, it said a pick-up in investment and the removal of red tape in India’s economy would continue to boost growth in the country but urged New Delhi must continue with its reforms.
After a slow first half, full-year GDP growth in China is now estimated at 7 per cent this year and 6.8pc next year, the Manila-based lender said in a statement.
That compares with its March estimate of 7.2pc in 2015 and 7pc next year.
“Slower growth in (China) is likely to have a noticeable effect on the rest of Asia given its size and its close links with other countries in the region,” chief ADB economist Wei Shang-Jin said.
Weaker-than-expected external demand, a declining working-age population and rising wages were all factors in the slowing growth of the Asian economic powerhouse, he added.
Beijing on Wednesday said its economy grew 7pc in April-June, the same as the previous three months and in line with its target for the year.
However, that would mark the slowest pace since 1990, a year after the Tiananmen Square crackdown.
Developing Asia as a whole is now expected to grow 6.1pc this year and 6.2pc in 2016, the ADB said, slower than the 6.3pc previously predicted for each year.
Inflation was revised down to 2.4pc from 2.6pc this year, with the 2016 forecast of 3pc unchanged.
Softness in major industrialised economies should lead to growth in East Asia — including China, Taiwan, South Korea and Hong Kong — to ease to 6.2pc this year instead of 6.5pc, the bank said.
It did not say if its 2016 forecast of 6.3pc growth for the sub-region was changed.
Forecasts for India were unchanged at 7.8pc in 2015 and 8.2pc in 2016, backed by a healthy monsoon and new investments.
Growth next year will be driven by continued service-sector expansion and “the removal of procedural bottlenecks that have hampered investment”, the bank said.
However, it added “risks to growth prospects could emerge from further delay in passing some legislation crucial to easing land acquisition for industry and to implementing a uniform goods and services tax”.
India’s advance would help South Asian growth rise to 7.3pc this year instead of 7.2pc, the ADB said, with better-than-expected growth in Bangladesh balancing a quake-induced slowdown in Nepal. In 2016 the sub-region should grow 7.6pc, unchanged from March’s forecast.
Southeast Asia’s economic growth forecast was cut to 4.6pc this year from 4.9pc, and 5.1pc next year from 5.3pc.
Lower global commodity prices and the Russian recession will dampen growth in Central Asia, with the 2016 growth cut to 4.2pc from 4.5pc, but 2015’s forecast of 3.5pc was unchanged.
Published in Dawn, July 17th, 2015
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