China's slowing economic growth is weakening momentum throughout the rest of Asia, the Asian Development Bank said on Tuesday as it revised down its forecasts for the region.
A day after Beijing released data showing its economic growth slowed for a second successive month in April-June, the ADB trimmed its outlook for developing Asia this year to 6.3 per cent growth, from 6.6 per cent. In the update to its annual Asian Development Outlook publication, first published in April, the bank also pared its 2014 forecast to 6.4 per cent, from 6.7 per cent.
“The drop in trade and scaling back of investment are part of a more balanced growth path for (China), and the knock-on effect of its slower pace is definitely a concern for the region,” the bank's chief economist, Changyong Rhee, said in a statement. “But we are also seeing more subdued activity across much of developing Asia,” Rhee added.
The update for this year is only a little better than what the bank described in the report as the region's “relatively sluggish” growth of 6.1 per cent last year. Developing Asia groups 45 nations or territories from Central Asia through to the Pacific islands, but excludes Japan. The report cited a marginally better outlook for the advanced economies, particularly Japan where it said monetary and fiscal reforms by Prime Minister Shinzo Abe appear to be bearing fruit.
However, this did not lead to stronger demand for Asian exports, with even Southeast Asia, the bright spot in early 2013, no longer faring as well.“Southeast Asia's strong start to the year is being tempered by slower growth in (China) and continued weak demand from advanced economies for its exports,” it said.