Growth of developing Asian economies this year will be lower than forecast amid ongoing worries about weak external demand from its key trading partners, the Asian Development Bank (ADB) said Tuesday, underlining a slowdown in China. In its Asian Development Outlook Supplement, the Manila-based lender trimmed the 2013 economic growth forecast for the region, excluding Japan and other industrialized countries, to 6.3 percent from 6.6 percent predicted in April. The 2014 projection is also lowered to 6.4 percent from 6.7 percent previously.
Continued tepid demand from the major industrial economies coupled with slower growth in China are weighing on the outlook for Asia's 45 developing economies, the ADB said in the report. "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 Association of Southeast Asian Nations (ASEAN) countries are otherwise seeing solid growth," said the ADB. "In China, a weaker-than-expected first half of the year and tighter credit have dampened growth expectations," it said. China, home to developing Asia's largest economy, is likely to see its economy expand 7.7 percent in 2013 and 7.
5 percent in 2014, the bank said, down from its April estimate of 8.2 percent in 2013 and 8.0 percent in 2014.
"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," ADB Chief Economist Changyong Rhee said in Manila, according to ADB's Website.
Growth in South Asia, including India, Pakistan, Sri Lanka and Bangladesh, is paced to grow by 5.6 percent in 2013 and 6.2 percent in 2014.
In India, meanwhile, slow progress in pushing through the reforms needed to ease business bottlenecks means growth is likely to be 5.8 percent this year, slower than the previously forecast 6.0 percent, the ADB said. It maintained the 2014 forecast of 6.5 percent for 2014. Growth projection for Southeast Asia is 5.6 percent in 2013 and 6.2 percent in 2014. Growth in East Asia, including China, Hong Kong, Taiwan and South Korea, was revised down from 7.1 percent to 6.7 percent in both in 2013 and in 2014. On the other hand, the ADB said advanced economies have largely met expectations so far in 2013, raising its growth forecast for major industrialized countries to 1.1 percent, with Japan expected to grow 1.8 percent this year, up from the previous estimate of 1.2 percent.
The ADB is a multilateral development finance institution dedicated to reducing poverty in Asia and the Pacific. Established in 1966, it has now owned by 67 members, mostly from the region, as well as the US, the UK and Germany.