VGP – The Asian Development Bank on Tuesday trimmed its 2013 growth forecast for developing Asia to 6.3% and its 2014 forecast to 6.4%, saying continued tepid demand from major industrial economies plus slower growth in China’s economy have dampened growth.
“This has had knock-on effects for other East Asian economies,” the bank said in its Asian Development Outlook supplement, referring to the weaker-than-expected Chinese economy in the first half of this year and tighter credit.
In April, the ADB had predicted the 45 developing members of the bank would grow 6.6% this year and 6.7% next year.
In the latest report, the bank said, “Although advanced economies have largely met expectations so far in 2013, developing Asia has not achieved the momentum envisaged in the Asian Development Outlook 2013.”
Growth in East Asia was revised down from 7.1% to 6.7% in both in 2013 and in 2014.
ADB chief economist Changyong Rhee said, “The drop in trade and scaling back of investment are part of a more balanced growth path for China, and the knock-on effect of its slower pace is definitely a concern for the region.”
“But we are also seeing more subdued activity across much of developing Asia,” Rhee said.
The Chinese economy is now forecast to expand 7.7% in 2013 and 7.5% in 2014. The ADB previously forecast growth of 8.2% in 2013 and 8% in 2014.
The report noted that China’s import and export growth has slowed given weak external demand, but notes continuing robust consumer confidence.
Slower growth in China has subdued the outlook for the entire East Asia region as well as, to a lesser extent, for Southeast Asia where the Philippines and other large Southeast Asian countries are otherwise seeing solid growth.
Elsewhere in South Asia, the report predicted Sri Lanka will continue to grow strongly while other parts of the region will see softer-than-anticipated growth.