ADB: TRADE WAR, BREXIT RISKS RISING
Lender projects slower growth of 5.7pc for developing Asia this year
GROWTH in developing Asia could slow for a second straight year in 2019 and lose further momentum next year, said the Asian Development Bank (ADB) yesterday, warning of rising economic risks from a bitter SinoUnited States trade war and a potentially disorderly Brexit.
Developing Asia, which groups 45 countries in the Asia-Pacific region, was expected to grow 5.7 this year, said the ADB in its Asian Development Outlook report, slowing from a projected 5.9 per cent expansion last year and 6.2 per cent growth in 2017. The 2019 forecast represents a slight downgrade from its December forecast of 5.8 per cent.
For next year, the region is forecast to grow 5.6 per cent, which would be the slowest since 2001.
“A drawn out or deteriorating trade conflict between China and the US could undermine investment and growth in developing Asia,” said ADB’s chief economist
Yasuyuki Sawada in a statement.
The lender also cited uncertainties stemming from US fiscal policy and a possible disorderly Brexit as risks to its outlook because they could slow growth in advanced economies and cloud the outlook for the world’s second-largest economy.
“Though abrupt increases in US interest rates appear to have ceased for the time being, policy makers must remain vigilant in these uncertain times,” he said.
China’s economy would probably grow 6.3 per cent this year, said the ADB, unchanged from its December projection but slower than the country’s 6.6 per cent expansion last year.
Growth in the Chinese mainland is projected to cool further to 6.1 per cent next year. China has set its 2019 economic growth target at 6.0 to 6.5 per cent.
By region, South Asia will remain the fastest growing in Asia Pacific, with the ADB predicting an expansion of 6.8 per cent this year — lower than its previous forecast of 7.1 per cent — and 6.9 per cent next year.
From an estimated 7.0 per cent growth for last year, India’s economy was projected to expand at a faster pace of 7.2 per cent this year and 7.3 per cent next year, said the ADB, as lower policy rates and income support to farmers boost domestic demand.
This year’s growth forecast for Southeast Asia was trimmed to 4.9 per cent from an earlier estimate of 5.1 per cent, as the Manila-based lender expects Malaysia, Singapore, Philippines and Thailand to grow slower than previously thought.
Southeast Asia is predicted to grow 5.0 per cent next year.
Citing stable commodity prices, the ADB cut its average inflation forecast for developing Asia to 2.5 per cent this year from 2.7 per cent previously, and it is expected to remain subdued at 2.5 per cent next year.