Logo of Phnom Penh Post newspaper Phnom Penh Post - ADB slashes economic growth forecasts as Asia’s biggest economies slow

ADB slashes economic growth forecasts as Asia’s biggest economies slow

ADB slashes economic growth forecasts as Asia’s biggest economies slow

The Asian Development Bank (ADB) has trimmed its forecasts for economic growth in developing Asia this year and next year as growth in China and India remains weighed down by both external and domestic factors.

In a supplement to its Asian Development Outlook 2019 Update, which was released in September, ADB now expects gross domestic product (GDP) in the region to expand 5.2 per cent in both 2019 and 2020, down from the September forecast of 5.4 per cent growth this year and 5.5 per cent next year.

“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,” said ADB chief economist Yasuyuki Sawada.

“Inflation, on the other hand, is ticking up on the back of higher food prices, as African swine fever has raised pork prices significantly.”

The supplement forecasts inflation of 2.8 per cent this year and 3.1 per cent next year, up from the September prediction that prices would rise 2.7 per cent this year and next.

Growth in China is now expected at 6.1 per cent this year and 5.8 per cent next year due to trade tensions and a slowdown in global activity coupled with weaker domestic demand, with family wallets being hit by pork prices that have doubled relative to a year ago.

However, growth could accelerate if China and the US come to an agreement on trade, the report says. In September, ADB forecast GDP growth of 6.2 per cent this year and 6.0 per cent next year.

Hong Kong, China, already in technical recession, will see severe downward pressures persist possibly into next year. The economy is now expected to contract 1.2 per cent this year and grow 0.3 per cent next year.

In South Asia, India’s growth is now seen at a slower 5.1 per cent 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.

Also, consumption was affected by slow job growth and rural distress aggravated by a poor harvest. Growth should pick up to 6.5 per cent in fiscal year 2020 with supportive policies. In September, ADB forecast India’s GDP to grow 6.5 per cent this year and 7.2 per cent next year.

In Southeast Asia, many countries are seeing continued export declines and weaker investment, and growth forecasts have been downgraded for Singapore and Thailand. GDP growth is expected to slow in the Pacific with activity in Fiji, the sub-region’s second largest economy after Papua New Guinea, expected to be more subdued than previously anticipated.

Central Asia is the only sub-region where prospects look a little brighter now than in September, largely thanks to increased public spending in Kazakhstan, the region’s largest economy.

Central Asia is now forecast to grow 4.6 per cent this year, up from the previous prediction for expansion of 4.4 per cent. The forecast for next year is for growth of 4.5 per cent. Kazakhstan’s economy is seen expanding by 4.1 per cent this year and 3.8 per cent next year.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Last year, it made commitments of new loans and grants amounting to $21.6 billion.

THE NATION (THAILAND)/ASIA NEWS NETWORK

MOST VIEWED

  • Research key to Kanitha’s rep for expertise

    Sok Kanitha is used to weighing in on controversial issues using a confident approach that signals expertise and authority, and a recent video she made was no exception. Her “Episode 342: The History of NATO” video went live on January 16, 2023 and immediately shot to 30,000 likes and 3,500

  • Cambodia maintains 'Kun Khmer' stance despite Thailand’s boycott threat

    Cambodia has taken the position that it will use the term "Kun Khmer" to refer to the sport of kickboxing at the upcoming Southeast Asian (SEA) Games, and has removed the term Muay from all references to the sport. Despite strong reactions from the Thai

  • Artificial insemination takes herd from 7 to 700

    Some farms breed local cows or even import bulls from a broad for the purpose of breeding heavier livestock for meat production. One Tbong Khnum farmer has found a more efficient way. Hout Leang employs artificial insemination to fertilise local cows. Thanks to imported “straws”

  • Chinese group tours return to Cambodia starting Feb 6

    Cambodia is among 20 countries selected by Beijing for a pilot programme allowing travel agencies to provide international group tours as well as flight and hotel packages to Chinese citizens, following a three-year ban. As the days tick down until the programme kicks off on February 6,

  • Capital-Poipet express rail project making headway

    The preliminary results of a feasibility study to upgrade the Phnom Penh-Poipet railway into Cambodia’s first express railway indicate that the project would cost more than $4 billion and would take around four years to complete. The study was carried out by China Road and

  • Thai boxers to join SEA Games’ Kun Khmer event

    The Cambodian SEA Games Organising Committee (CAMSOC) – together with the Kun Khmer International Federation (KKIF) and Khmer Boxing Federation – have achieved a “great success” by including Kun Khmer in the upcoming biennial multi-sports event on its home soil for the first time, said a senior