Development bank trims Asia growth forecast, blames slowdown in India

Report said India's demonetization of large banknotes will likely dampen growth to 7% from a previous forecast of 7.4%.

MANILA, Philippines — The Asian Development Bank has trimmed its economic growth forecast this year for developing Asia to 5.6%.

The revision was slightly below the previous projection of 5.7% due to a slight slowdown in India, one of developing Asia’s biggest economies. Forecast growth for the entire region next year remains unchanged at 5.7%.

ADB said in a report that India’s surprise demonetization of large banknotes will likely dampen growth this year to 7% from a previous forecast of 7.4%. But South Asia is the most dynamic part of the region, with growth expected at 6.6% this year, down from the previous forecast of 6.9%. South Asia’s growth is estimated at 7.3% in 2017.

The report says regional giant China is on course to grow 6.6% this year and 6.4% in 2017.

East Asia as a whole is seen to expand by 5.8% this year and 5.6% in 2017 as growth stabilizes in line with earlier forecasts.

The report said growth in the major Southeast Asian economies in the third quarter met projections and even surpassed them in Malaysia and the Philippines. The sub-region is forecast to expand by 4.5% in 2016, and picking up to 4.6% in 2017.

“Asian economies continue their robust expansion in the face of global economic uncertainties,” said ADB Deputy Chief Economist Juzhong Zhuang. “Structural reforms to boost productivity, improve investment climate, and support domestic demand can help maintain growth momentum.”

ADB said the combined growth for the major industrial economies exceeded expectations, ticking up 0.1 percentage point to 1.5% in 2016. The growth forecast for 2017 is maintained at 1.8%, with robust consumer spending supporting the US economy, and monetary policy and improved labour markets fueling growth in the euro area.

Japan’s expansion, meanwhile, will be buoyed by strong exports, despite a stronger currency, the report said.

News from © Canadian Press Enterprises Inc. 2016

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