Developing Asia, which groups 45 countries in the Asia-Pacific region, is expected to grow 5.7 this year, the Asian Development Bank (ADB) said in its Asian Development Outlook report, slowing from a projected 5.9 per cent expansion in 2018 and 6.2 per cent growth in 2017.
This shows a worrying loss of momentum for the second year in a row with 2020 looking even bleaker still. ADB speculates that there is a rising economic risk stemming from a bitter Sino-U.S.trade war and a potentially disorderly Brexit.
“A drawn out or deteriorating trade conflict between the People’s Republic of China and the United States could undermine investment and growth in developing Asia”, said Yasuyuki Sawada, ADB’s chief economist.
The lender also cited uncertainties stemming from U.S. fiscal policy and a possible disorderly Brexit as risks to its outlook because they could slow growth in advanced economies and cloud the outlook for the world’s second largest economy.
Brexit’s implications for Asia would be huge, from companies being forced to review investment strategies, to governments exploring new trade deals as the U.K. looks to sign alternative free trade agreements.
The ADB speculates that China’s economy will probably grow 6.3 percent this year, unchanged from its December projection, but slower than the country’s 6.6 percent expansion in 2018. Growth in the Chinese mainland is projected to cool further to 6.1 percent in 2020. China has set a 6.0 to 6.5 per cent economic growth target for 2019.
South Asia will remain the fastest growing in Asia Pacific, with the ADB predicting an expansion of 6.8 percent this year – lower than its previous forecast of 7.1 percent – and 6.9 percent next year.
From an estimated 7.0 percent growth in 2018, India’s economy is projected to expand at a faster pace of 7.2 percent in 2019 and 7.3 percent in 2020, as lower policy rates and income support to farmers boost domestic demand.
This year’s growth forecast for Southeast Asia was trimmed down to 4.9 percent from an earlier estimate of 5.1 percent, as ADB expect Malaysia, Singapore, Philippines and Thailand to grow slower than previously thought. Next year, Southeast Asia is predicted to grow 5.0 percent.