Maintaining Growth Momentum for Developing Nations- A Challenge: ADB

The Asian Development Bank trimmed the growth forecast for 45 developing member countries to 6.3% for 2013 while 6.4% for 2014. In India, the growth is likely to be 5.8% this year, slower than the previously forecast 6.0% due to slow progress in pushing through the reforms needed to ease business bottlenecks.

The latest Asian Development Outlook Supplement released on July 16, 2013 trimmed the 2013 growth forecast for the 45 developing member countries of ADB to 6.3% and cut its forecast to 6.4% for 2014. In April, ADB had predicted the region to grow 6.6% this year and 6.7% next year. The five largest economies in the Association of Southeast Asian Nations are poised to grow by 5.2% in 2013 and 5.6% in 2014.

The reason for trimmed growth forecast is the continued lukewarm demand from the major industrial economies coupled with slower growth in the People’s Republic of China (PRC) which are weighing on the outlook for developing Asia

China is likely to see its economy expand 7.7% this year and 7.5% in 2014 after growth of 7.8% in 2012. The report notes that import and export growth has slowed given weak external demand, but notes continuing robust consumer confidence. However, Philippines and other large ASEAN countries are otherwise seeing solid growth. Sri Lanka continues to grow strongly while other parts of the region will see softer than anticipated growth.

The report has also cut short forecasts for Central Asia, reflecting the sluggish economic performance of Kazakhstan and Georgia and for the Pacific Region where Timor-Leste is seeing a slowdown in government spending.

With softer oil prices and relatively stable food prices, inflation in developing Asia is now forecast to dip to 3.5% in 2013.

Warm regards,

Dr. S P Sharma

Chief Economist