Developing Asian economies will grow 5.7 percent in 2019, the Asian Development Bank (ADB) said in a report Wednesday, down from 5.9 percent in 2018, due to US-China trade tensions. The projected growth rate is the lowest since the 4.9 percent growth in 2001. In its Asian Development Outlook 2019, the Manila-based lender also forecast Asia’s gross domestic product (GDP), excluding Japan and other industrialized countries, to further slow to 5.6 percent in 2020.
“A drawn-out or deteriorating trade conflict between China and the US could undermine investment and growth in developing Asia,” ADB Chief Economist Yasuyuki Sawada said in a report. “Other risks are a potentially rapid slowdown in advanced economies and China, as well as financial volatility,” the report said.
GDP of China, Asia’s biggest economy, is forecast to expand 6.3 percent this year and 6.1 percent in 2020, slower than 6.6 percent expansion last year. The Chinese economy remains strong despite the growth slowdown in recent years. The main risk to China’s growth outlook is the possible intensification of the trade conflict with the US, which would damage investor and consumer sentiment,” the ADB noted.
By contrast, stronger consumption will see growth in India, the region’ s second-largest developing economy, to rise 7.2 percent in 2019 and 7.3 percent next year, up from 7.0 percent in 2018, with lower policy interest rates and income support to farmers boosting domestic demand, the bank said. South Asia overall will outperform other subregions and is forecast to expand 6.8 percent this year and 6.9 percent in 2020. The ADB also warned of downside risks to the outlook of developing Asian economies.
“A drawn-out or deteriorating trade conflict between China and the US could undermine investment and growth in developing Asia,” it said. “With various uncertainties stemming from US fiscal policy and a possible disorderly Brexit, growth in the advanced economies could turn out slower than expected, undermining the outlook for China and other economies in the region.” Developing Asia covers 45 nations in Central Asia, East Asia, South Asia, Southeast Asia and the Pacific, but excludes Japan, Australia and New Zealand.
The ADB is a multilateral development finance institution dedicated to reducing poverty in Asia and the Pacific. Established in 1966, it has now owned by 68 members, with 49 from the region, as well as the US, Britain and Germany.
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