After years of rapid growth, developing Asia must brace for a prolonged period of moderate expansion amidst an ongoing slump in global demand, according to the Asian Development Bank (ADB).
The ADB has significantly scaled back its 2012 and 2013 growth forecasts for developing Asia, fearing disastrous spillovers in this region of the global economic slowdown, ongoing euro crisis, looming fiscal cliff in the U.S., and deceleration of the two Asian giants China and India
In its Asian Development Outlook 2012 Update released October 3, ADB projects developing Asia’s gross domestic product (GDP) growth dropping to 6.1 percent in 2012 and 6.7 percent in 2013, down significantly from 7.2 percent in 2011.
“Developing Asia must adapt to a moderate growth environment, and countries will need to do more to reduce their reliance on exports, rebalance their sources of growth, and increase their productivity and efficiency,” said Changyong Rhee, ADB’s chief economist.
China is forecast to grow 7.7 percent this year and 8.1 percent in 2013, a dramatic drop from the 9.3 percent posted in 2011. This is expected to have a knock-on effect elsewhere in East Asia, with diminished demand for intra-regional exports.
Weak demand from industrialized countries is also impacting East Asia’s exports, and growth in the sub-region is now forecast at 6.5 percent in 2012, with an uptick to 7.1 percent in 2013.
For India, GDP growth will slow to 5.6 percent in 2012, down from 6.5 percent in 2011. The downward revision in India’s prospects, due in significant part to weak investment demand, is expected to slow South Asia’s growth to 5.6 percent and 6.4 percent for 2012 and 2013, respectively.
Growth in Southeast Asia is expected to quicken to just over 5 percent in 2012, mainly due to Thailand’s recovery from severe flooding in 2011. Higher levels of government spending have contributed to growth in Malaysia and the Philippines, while investment and private consumption in the sub-region are generally buoyant with inflationary pressures abating.
Economic activity in Central Asia is moderating as oil prices stabilize and external demand cools. GDP growth is now projected at 5.7 percent in 2012 and is expected to edge up to 6 percent in 2013.
The growth forecast remains unchanged for the Pacific region at 6 percent for 2012.
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