ADB Trims Developing Asia Growth Outlook
2012-07-12 14:49:12
The Asian Development Bank on Thursday downgraded developing Asia's growth outlook as the European malaise and the sluggish U.S. recovery weighed notably on growth prospects.
The Manila-based ADB projected 6.6 percent growth for 2012 and 7.1 percent expansion next year. The estimates were below the 6.9 percent and 7.3 percent forecast published in April.
"Economic growth in developing Asia moderated during the first half of 2012 as slower growth in the U.S. and euro area reduced demand for the region's exports," the bank said in its latest Asian Development Outlook Supplement.
Unwinding policy stimulus in some countries has contributed to the region's weaker expansion, the report said. Moreover, slower growth in the major two economies in the region, namely China and India hampered Asia's overall economic performance, it added.
Citing a fall in exports, industrial output, and investment, the lender cut China's growth estimate for 2012 to 8.2 percent from 8.5 percent and the 2013 projection to 8.5 percent from 8.7 percent.
Likewise, India's growth estimate was downgraded citing poor demand and high inflation. The Indian economy is expected to grow by 6.5 percent in 2012, down from the previous forecast of 7 percent. In 2013, growth should go up to 7.3 percent, less than the previously expected 7.5 percent.
In India, high inflation and trade deficits make it difficult to ease monetary policy to stimulate demand, the report said.
The lender projects inflation in developing Asia to moderate to 4.4 percent given the weaker outlook on economic growth and the declining trends in international oil and food prices.
The euro area is expected to recover next year after contracting by 0.7 percent in 2012, the ADB said. The projection for 2013 was lowered to 0.8 percent from 1 percent. At the same time, the bank said the U.S. will grow 1.9 percent this year instead of 2 percent.
Meanwhile, growth estimates for Southeast Asia's economies were left virtually unchanged. The region is forecast to post growth of 5.2 percent in 2012 and 5.6 percent in 2013.
A strong rebound in Thailand, healthy growth in the Philippines, and increasing consumer demand in Indonesia have helped the sub-region, and most governments have sufficient policy space to ease monetary policy and provide fiscal stimulus if needed, the bank observed.