Growth forecasts for developing Asia have been revised down to 5.8% in 2015 and 6% from its forecast earlier this year of 6.3% for both years, in 2016 by the Asian Development Bank (ADB).
ADB’s recent update to its “Asian Development Outlook 2015” (ADO 2015) that was published in March has lowered the gross domestic product (GDP) growth forecast for this year and next year to a pace even lower that the 2014 rate of 6.2%.
The update said the strong headwinds faced by the region in the first half, moderating prospects for the large economies of China and India, and the delayed recovery in the major industrial economies weighed on the outlook.
“Developing Asia’s growth is moderating over the forecast horizon. The first half of 2015 has been softer than expected across the board, and projections for all subregions are adjusted downward from ADO 2015 for both 2015 and 2016,” said the new report.
The East Asian subregion will grow more moderately in the near term. Growth faltered in all economies in the first half of 2015. Weaker-than-expected outcomes in China and indications of softness in 2016 prompt downward revisions to growth projections for the subregion’s largest economy. Growth in China is expected to drop to 6.8% from 7.3% in 2014, but strengthening external demand plus accommodative monetary and fiscal policies should contain further growth moderation to 6.7% in 2016. East Asia is expected to expand at 6% in both 2015 and 2016, a considerable slowdown from 6.5% in 2014.
As for South Asia, it is picking up more moderately than forecast. Growth acceleration in India has been more modest than forecast in ADO 2015 as slower implementation of planned major reforms have stymied the expected revival in investment, and as sagging exports have created headwinds. In Nepal, a catastrophic earthquake in April that caused great loss of life and extensive devastation, including to transport, has pared growth in 2015 and limits the pace of recovery in 2016. Growth is now projected at 6.9% in 2015, below the 7.2% March forecast but up from 6.7% in 2014. Growth is forecast to rise further to 7.3% in 2016.
Meanwhile, Southeast Asia’s projected growth recovery is delayed to next year. Subdued economic growth in the major industrial economies and China weakened export demand. Thailand has yet to bounce back from its 2014 slump, while infrastructure investment has fallen behind schedule in Indonesia and the Philippines. Drought in several countries and floods in Myanmar have hurt agriculture. Vietnam, by contrast, is growing faster than anticipated earlier this year, powered by foreign direct investment and buoyant private consumption. Growth is forecast to be 4.4% in 2015—the same pace as in 2014 but below the 4.9% forecast in ADO 2015. Expected improvements in exports and infrastructure investment are seen lifting growth to 4.9% in 2016.
Central Asian commodity exporters endure weak prices and prospects. Export revenues crimped by low oil and gas prices have constrained growth in energy exporters Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan. As it adjusts to lower global commodity prices and recession in the Russian Federation, Central Asia is expected to grow at 3.3% in 2015 and 4.2% in 2016.
The Pacific faces a dimmer economic outlook. Papua New Guinea, the dominant economy in the subregion, was affected by the drop in oil and gas prices more than previously expected as the fall in revenue undercut public spending. Growth in the Pacific is now forecast at 6.7% in 2015 and 3.9% in 2016.
Photo: Shanghaid02
