Growth in Developing Asia is projected to expand by 5.7% in 2019 despite the trade conflict between the People’s Republic of China (PRC) and the United States (US), - reads the report published by the Asian Development Bank today.
According to the report, developing Asia is forecast to maintain strong but moderating growth in line with April forecasts in Asian Development Outlook 2019 (ADO 2019), even as trade conflict continues between the PRC and the US. The regional gross domestic product (GDP) is forecast to expand by 5.7% in 2019, as unexpectedly strong growth in Central Asia offsets small downgrades for East, South, and Southeast Asia in 2019, with growth slowing marginally to 5.6% in 2020. Excluding the newly industrialized economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei,China, the regional growth outlook is revised down slightly to 6.1% for 2019 and maintained at that rate for 2020.
The combined growth forecast for the major industrial economies—the US, the euro area, and Japan—is maintained from ADO 2019. Upward revisions to growth prospects in the US are offset by downward adjustments to euro area growth forecasts.
“This Supplement maintains ADO 2019 projections from April for growth in developing Asia at 5.7% in 2019 and 5.6% in 2020, with domestic demand supporting expansion as trade tensions persist. Excluding the newly industrialized economies, the 2019 regional growth forecast is revised down marginally to 6.1%, while the 2020 projection is maintained at 6.1%.
The PRC is still expected to grow by 6.3% in 2019 and 6.1% in 2020, but East Asia’s growth projection for 2019 is revised down by 0.1 percentage points in line with a downgrade for the Republic of Korea.
The South Asian outlook remains robust, with growth projected at 6.6% in 2019 and 6.7% in 2020. India is expected to grow by 7.0% in 2019 and 7.2% in 2020, slightly slower than projected in April because the fiscal 2018 outturn fell short.
Recent data suggest that Southeast Asia grew less than anticipated, resulting in slight downward revisions to the growth forecasts, now 4.8% for 2019 and 4.9% for 2020.
An improved outlook for Kazakhstan prompts an upward revision to the 2019 growth projection for Central Asia. The Pacific is on track to meet April growth forecasts.
Higher global oil prices and domestic food price inflation in the PRC call for a slight upward revision to regional inflation projections, to 2.6% for both 2019 and 2020.
Trade tensions persist between the world’s two largest economies, albeit with a truce called in June after escalation in May. The trade conflict is now having discernible effects on regional investment and trade patterns”, reads the report.