MANILA (DPA) – The Asian Development Bank (ADB) on Thursday cut its economic growth forecast for developing Asia amid slower-than-expected growth in the United States and China.
The Manila-based bank said the region's gross domestic product (GDP) was projected to grow by only 6.1 per cent in 2015, down from the original forecast of 6.3 per cent in its annual Asian Development Outlook published in March.
In 2016, GDP was projected to expand by 6.2 per cent, down from the initial projection of 6.3 per cent, according to a supplement report to the Outlook.
"With the United States contracting in the first quarter and some underperformance within Asia and the Pacific, growth forecasts for developing Asia are adjusted down," the report said.
"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 through regional and global value chains," ADB chief economist Shang Jin-Wei added.
Full-year growth in China is now estimated at 7 per cent in 2015, down from 7.2 per cent previously after a slow first half. Growth would ease further to 6.8 per cent next year, the report said.
"Consumption growth in the country remains robust but investment growth has continued to decelerate," it said. "The financial sector is also expected to contribute less to growth after the recent stock market correction, although the drop in stock prices is unlikely to have much impact on consumption."
The ongoing softness in the US and other major industrialized economies would also drag down growth in East Asia, where GDP is expected to now expand by 6.2 per cent in 2015, down from the initial forecast of 6.5 per cent.
South-East Asia would also see slower-than-previously forecast growth of 4.6 per cent in 2015, weighed down by lower-than-expected first half performances in Indonesia, Singapore, and Thailand, the report said.
In 2016, the sub-region's economy is projected to expand 5.1 per cent, below the earlier estimated growth of 5.3 per cent.
The growth forecast in India is unchanged at 7.8 per cent in the fiscal year 2015 and 8.2 per cent in the fiscal year 2016, boosting South Asia's projected growth to 7.3 per cent this year from 7.2 per cent seen earlier.
In 2016, growth in the sub-region is expected to expand 7.6 per cent, the report added.
The bank revised down its projection for inflation in the region to 2.4 per cent in 2015, from an earlier estimate of 2.6 per cent amid softness in fuel prices and subdued food costs.
"Inflation is seen at 3 per cent in 2016, unchanged from the previous forecast," it added.
(Reporting by Girlie Linao)