ADB trims growth forecasts as Asia’s biggest economies slow

KUALA LUMPUR: The Asian Development Bank (ADB) has trimmed its forecasts for economic growth in developing Asia to 5.2% in both 2019 and 2020 as it sees external and domestic factors likely affecting growth in China and India.

In a supplement, released on Dec 11, to its Asian Development Outlook 2019 Update, ADB, which initially expected the region’s gross domestic product (GDP) to grow 5.4% this year and 5.5% next year, has trimmed this to 5.2% for both years.

ADB chief economist Yasuyuki Sawada said while growth rates are still solid in developing Asia, persistent trade tensions have taken a toll on the region and are still the biggest risk to the longer-term economic outlook.

“Domestic investment is also weakening in many countries as business sentiment has declined. Inflation, on the other hand, is ticking up on the back of higher food prices as African swine fever has raised pork prices significantly,” he added.

The supplement forecasts inflation of 2.8% in 2019 and 3.1% in 2020, up from the September prediction that prices would rise 2.7% this year and next.

In East Asia, growth in China is now expected at 6.1% this year and 5.8% next year due to trade tensions and a slowdown in global activity coupled with weaker domestic demand, although the report said growth could accelerate if the US and China come to an agreement on trade.

Previously in September, ADB forecast GDP growth of 6.2% in 2019 and 6.0% in 2020 for the world’s second-largest economy.

In South Asia, India’s growth is now seen at a slower 5.1% in fiscal year 2019 as the foundering of a major non-banking financial company in 2018 led to a rise in risk aversion in the financial sector and a credit crunch.

“Growth should pick up to 6.5% in fiscal year 2020 with supportive policies. In September, ADB forecast India’s GDP to grow 6.5% in 2019 and 7.2% in 2020,” it said.

In Southeast Asia, many countries are seeing continued export declines and weaker investment, but growth forecasts for Malaysia are kept at 4.5% for 2019 and 4.7% for 2020. – Bernama

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