Trade tensions darken growth outlook for developing Asia: ADB

Developing Asia, a group of 45 countries across Asia and the Pacific,  will likely grow 5.4 percent this year and 5.5 percent next year, down from the 5.7 percent  and 5.6 percent growth forecast in July, the ADB said in an update to its Asian  Development Outlook report.

Growth in the region was 5.9 percent in 2018.

“The People’s Republic of China–U.S. trade conflict could well persist  into 2020, while major global economies may struggle even more than we  currently anticipate,” Yasuyuki Sawada, ADB’s chief economist, said in a  statement

The dispute between the world’s two largest economies has dragged on for  well over a year, with both adding tariffs worth billions of dollars on  each others goods. High level talks between the two are scheduled for  early October.

China’s economy will probably grow 6.2 percent this year, the ADB said, weaker  than its 6.3 percent projection in July. Growth in the Chinese mainland is  projected to cool further to 6 percent in 2020. China is targeting 6 percent to  6.5 percent growth in 2019.

Along with weakening trade momentum, the Manila-based lender also sees  declining investment as a major risk to the region’s growth prospects.

By sub-regions, South Asia will remain the fastest growing in Asia  Pacific, even after the ADB trimmed its 2019 outlook to 6.2 percent from 6.6 percent  as it also slashed its growth estimate for India to 6.5 percent from 7 percent. ADB  maintained India’s 7.2 percent growth projection for next year.

Southeast Asia is also expected to end 2019 on a weaker note, with  growth likely to slow to 4.5 percent compared with a previous forecast of 4.8 percent  and from last year’s 5.1 percent pace. Growth next year is seen picking up to  4.7 percent, but still lower than the ADB’s 4.9 percent estimate in July.

Developing Asia will also have to deal with slightly higher prices due  to rising food costs, the ADB said. It raised its 2019 and 2020  inflation forecasts for the region to 2.7 percent from 2.6 percent earlier.