The Asian Development Bank (ADB) on Tuesday said it slashed its growth outlook for developing Asia on weaker demand from developed nations and slowing China output, but maintains that certain Southeast Asian economies like the Philippine will remain solid.
In its latest Asian Development Outlook Supplement, the Manila-based lender trimmed the 2013 growth forecast for 45 developing member countries of ADB to 6.3 percent
from a 6.6-percent projection in April.
The ADB also cut its 2014 forecast to 6.4 percent from 6.7 percent.
"Continued tepid demand from the major industrial economies coupled with slower growth in the People’s Republic of China (PRC) are weighing on the outlook for developing Asia," the ADB said.
"The drop in trade and scaling back of investment are part of a more balanced growth path for PRC, and the knock-on effect of its slower pace is definitely a concern for the region. But we are also seeing more subdued activity across much of developing Asia," ADB Chief Economist Changyong Rhee said in a statement.
In China, a weaker-than- expected first half of the year and tighter credit have dampened growth expectations, the report noted.
China is now forecast to expand by 7.7 percent in 2013 from an earlier 8.2 percent and 7.5 percent in 2014 from 8.0 percent.
This is seen to have knock-on effect for other East Asian economies, where growth is revised down from 7.1 percent to 6.7 percent
in both 2013 and 2014.
Slower China growth to a lesser extent will subdue Southeast Asian economies, but "Philippines and other large ASEAN countries are otherwise seeing solid growth," the ADB said.
Southeast Asia's growth outlook was revised down to 5.2 percent from 5.4 percent in 2013 and to 5.6 percent from 5.7 percent in 2014.
In India, slow progress in pushing for the reforms needed to ease business bottlenecks means growth is likely to be 5.8 percent this year, slower than the previous forecast of6.0 percent.
The ADB, however, maintained its 2014 forecast of 6.5 percent for India.
Elsewhere in South Asia, Sri Lanka continues to grow strongly while other parts of the region will see softer than anticipated growth, the report noted.
The bank also trimmed the forecast for Central Asia to 5.3 percent from 5.5 percent in 2013, reflecting the sluggish economic performance of Kazakhstan and Georgia. It maintained the region's 2014 projection at 6.0 percent.
Growth outlook for the
Pacific was also cut to 5.0 percent from 5.2 percent in 2013, but maintained the 2014 forecast at 5.5 percent.
Inflation pressures, meanwhile, are waning on the back of declining energy and food prices due to slower global demand for fuels and good harvests.
"The growth slowdown in developing Asia and other emerging markets, along with continued softness in the major industrial economies, is suppressing demand for energy, while strong harvests are keeping food prices in check," the report read.
— Siegfrid Alegado/VS, GMA News