MANILA, Philippines (AP) — Softer growth prospects for China and a weak recovery in major industrial economies are expected to push down economic growth in developing Asia to 5.7 percent in 2016 and 2017, below previous projections, according to an Asian Development Bank report released Wednesday. The region’s economy grew 5.9 percent in 2015.
The Asian Development Outlook 2016 said China’s economic growth is seen moderating to 6.5 percent this year from 6.9 percent last year and to 6.3 percent next year. Slower exports, a falling labor supply and supply-side reforms are reshaping the world’s second-largest economy toward more domestic consumption and a further reduction in excess industrial capacity, it said.
The report says India will remain one of the fastest-growing major economies, expanding by 7.4 percent in 2016 and 7.8 percent in 2017. Last year, India’s economy grew 7.6 percent, with strong public investment boosting growth.
Southeast Asia’s economy is set for stronger growth at 4.5 percent this year and 4.8 percent next year, up from 4.4 percent in 2015. The region will be led by its biggest economy, Indonesia, as it ramps up investment in infrastructure and implements policy reforms to spur private investment.
“(China’s) growth moderation and uneven global recovery are weighing down overall growth in Asia,” said Shang-Jin Wei, ADB’s chief economist. “Despite these pressures, the region will continue to contribute over 60 percent of total global growth.”
He urged countries across Asia to implement reforms to boost productivity, invest in under-supplied infrastructure, and follow sound macroeconomic management to increase growth potential and insulate them from global instability.
Aggregate growth in the United States, the euro area and Japan will stay at 1.8 percent in 2016 and inch up to 1.9 percent in 2017, the report said.