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ADB report foresees Asia to maintain moderating growth

  • Published at 10:47 pm July 18th, 2019
ADB
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In a supplement to its Asian Development Outlook (ADO), ADB maintains growth forecasts for developing Asia at 5.7% in 2019 and 5.6%  in 2020-unchanged from its April forecast

Developing Asia will maintain strong but moderating growth over 2019 and 2020, as supportive domestic demand counteracts an environment of global trade tensions, according to a new Asian Development Bank (ADB) report released on Thursday.

In a supplement to its Asian Development Outlook (ADO), ADB maintains growth forecasts for developing Asia at 5.7% in 2019 and 5.6%  in 2020-unchanged from its April forecast.

These growth rates are slightly down from developing Asia’s 5.9% growth in 2018.

Excluding the newly industrialized economies of Hong Kong, China, the Republic of Korea, Singapore, Taipei and China, the regional growth outlook has been revised down from 6.2% to 6.1% in 2019 and will maintain the rate in 2020.

Elsewhere in South Asia, preliminary official estimates of GDP growth surpassed ADO 2019 forecasts for FY2019 in Bangladesh (ended 30 June 2019) and Nepal (ended 16 July 2019). Growth in Bangladesh accelerated from 7.9% in FY2018 to 8.1 percent in FY2019 with faster growth in industry and services. Investment rose from 31.2% of GDP in FY2018 to 31.6% in FY2019.

The report said deepening trade tension between the People’s Republic of China (PRC) and the United States (US) remains the largest downside risk to this outlook, despite an apparent truce in late June that could allow trade negotiations between the two countries to resume.

“Even as the trade conflict continues, the region is set to maintain strong but moderating growth,” said ADB Chief Economist Yasuyuki Sawada.

“However, until the world’s two largest economies reach agreement, uncertainty will continue to weigh on the regional outlook,” added the ADB official.

The growth outlook for East Asia in 2019 has been revised down to 5.6%  because of slower than expected activity in the Republic of Korea. The subregion’s growth outlook of 5.5 percent for 2020 is unchanged from April.

Growth for the sub-region’s largest economy, the PRC, is also unchanged, with forecasts of 6.3% in 2019 and 6.1% in 2020, as policy support offsets softening growth in domestic and external demand.

In South Asia, the economic outlook is robust, with growth projected at 6.6% in 2019 and 6.7% in 2020, albeit lower than forecast in April.

The growth outlook for India has been cut to 7.0% in 2019 and 7.2% in 2020 because the fiscal 2018 outturn fell short.

The outlook for Southeast Asia has been downgraded slightly to 4.8% in 2019 and 4.9% in 2020 due to the trade impasse and a slowdown in the electronics cycle.

In Central Asia, the growth outlook for 2019 has been revised up to 4.3% on account of an improved outlook for Kazakhstan.

Central Asia’s growth outlook of 4.2% for 2020 is unchanged from April. The growth outlook in the Pacific-3.5% in 2019 and 3.2%  in 2020-is unchanged, as the sub-region continues to rebound from the effects of Cyclone Gita and an earthquake in Papua New Guinea, the sub-region’s largest economy.

The major industrial economies have had slight revisions to their growth forecasts, with the US revised up to 2.6% for 2019 and the Euro area revised down to 1.3%. The growth outlook for Japan is unchanged at 0.8%in 2019 and 0.6 percent in 2020.

Developing Asia’s inflation projections were revised up from 2.5% to 2.6% for both 2019 and 2020, reflecting higher oil prices and various domestic factors, such as the continuing outbreak of African swine fever in several Asian economies, which is expected to drive up pork prices in the PRC.