By APD writer Melo M. Acuña
MANILA, July 18 (APD) – Developing Asia will maintain strong but moderating growth over 2019 and 2020 as vibrant domestic demand counteracts an environment of global trade tensions. This is how the Asian Development Bank looks at events in a report released today.
In its supplement to its Asian Development Outlook (ADO), the regional bank maintains its growth forecasts for developing Asia at 5.7% in 2019 and 5.6% in 2020, unchanged from its April forecast. The growth rates are slightly down from developing Asia’s 5.9% in 2018. Setting aside newly industrialized economies of Hong Kong, China, the Republic of Korea, Singapore and Taipei, China, the regional growth outlook has been revised down from 6.2% to 6.1% in 2019 and maintained at that rate in 2020.
ADB, in its statement released before midday today said the deepening trade tension between the People’s Republic of China (PRC) and the United States (US) remains the largest downside risk to this outlook, despite an apparent truce or cooling off in late June that could allow trade negotiations between the two countries to resume.
“Even as the trade conflict continues, the region is set to maintain strong but moderating growth,” said ADB Chief Economist Yasuyuki Sawada. He added until the world’s two largest economies reach an agreement, “uncertainty will continue to weight on the regional outlook.”
The growth outlook for East Asia in 2019 has been revised down to 5.6% because of slower than expected activity in the Republic of Korea. The subregion’s growth outlook of 5.5% for 2020 is unchanged from April, with forecasts of 6.3% in 2019 and 6.1% in 2020, as policy support offsets softening growth in domestic and external demand.
In South Asia, according to the ADB statement, the economic outlook is robust, with growth projected at 6.6% in 2019 and 6.7% in 2020, despite a lower forecast in April. The growth outlook for India has been cut to 7.0% in 2019 and 7.2% in 2010 because the fiscal 2018 outturn fell short.
For Southeast Asia, its outlook has been downgraded slightly to 4.8 percent in 2019 and 4.9 for 2020 due to the trade impasse and slowdown in the electronics cycle. In Central Asia, the growth outlook for 2019 has been revised up to 4.3% due to an improved outlook for Kazakhstan. Central Asia’s growth outlook of 4.2% for 2020 is unchanged from April as the growth outlook in the Pacific, 3.5% in 2019 and 3.3.2% in 2020, has remained unchanged because the subregion continues to rebound from the impact of Cyclone Gita and an earthquake in Papua New Guinea, the subregion’s largest economy.
The ADB said the major industrial economies have had slight revisions to their growth forecasts, with the United States revised up to 2.6% in 2019 and the Euro area revised down to 1.3%. The growth outlook for Japan is unchanged at 0.8% in 2019 and 0.6% in 2020.
Meanwhile, Developing Asia’s inflation projections were revised from 2.5% to 2.6% for 2019 and 2020 as higher oil prices and various domestic factors, including the outbreak of African swine fever in several Asian economies, which is expected to drive up pork prices in the People’s Republic of China.
The Asian Development Bank was established in 1966 and its owned by 68 members with 49 countries from the region.
(ASIA PACIFIC DAILY)