(MENAFN- Kuwait News Agency (KUNA)) The Asian Development Bank (ADB) on Thursday cut its growth forecast for developing Asia to 6.1 percent for this year and 6.2 percent for 2016, lower than 6.3 percent for both years it forecast in March.
The downgrade of gross domestic product (GDP) projection was due to slower-than-expected economic activity in the US and China, the ADB said in a supplement to its Asian Development Outlook 2015.
Developing Asia covers 45 developing economies of Central Asia, East Asia, South Asia, Southeast Asia and the Pacific, and excludes industrialized nations such as Japan and Australia.
"Slower growth in China is likely to have a noticeable effect on the rest of
Asia given its size and its close Ø£½links with other countries in the region through regional and global value chains," ADB chief economist Shangjin Wei said.
"While weaker-than-expected external demand, a declining working age population and rising wages have contributed to a slower rate of growth in China, reforms aimed at improving labor market flexibility and capital allocation to the most productive firms are needed as they can also help to raise the growth rate," Wei said. The ADB revised down China's growth forecast to 7.0 percent in 2015 from 7.2 percent estimate in March, and to 6.8 percent from 7.0 percent for 2016. Consumption growth in China remains robust but investment growth has continued to decelerate, the Manila-based lender pointed out. "The financial sector is also expected to contribute less to growth after the recent stock market correction, although the drop in stock prices is unlikely to have much impact on consumption," it said. The bank maintained 7.8 percent growth outlook for India in fiscal 2015 and 8.2 percent in fiscal 2016 on the back of a healthy monsoon and new investments.
The ADB revised down the projection for inflation this year to 2.4 percent
from 2.6 percent earlier amid ongoing softness in fuel prices and subdued food costs are containing inflationary pressures. Inflation is seen at 3.0 percent in 2016, unchanged from the previous forecast.
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 67 members, mostly from the region, as well as the US, the UK and Germany. Last year, its financial assistance totaled USD 22.9 billion, including co-financing of USD 9.2 billion. (end)
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