Lower growth forecasts for Asia Pacific

 

For Thailand, the 2013 GDP forecast is revised downward from 4.9 per cent to 3.8 per cent, while the 2014 forecast is cut from 5 per cent to 4.9 per cent, according to the Asian Development Outlook 2013 released today. 

Throughout the region, the average growth is expected to be 6 per cent and 6.2 per cent during 2013-2014, against previous forecasts of 6.6 per cent and 6.7 per cent. Last year, the region's growth rate was 6.1 per cent.

Southeast Asia’s growth will be crimped by the soft performances of its three biggest economies with lackluster exports and moderating investment weighing on Indonesia, Thailand and Malaysia. By contrast the Philippines is expected to continue to perform strongly. The sub-region will grow 4.9 per cent in 2013, with the pace set to quicken to 5.3 per cent in 2014, as it benefits from an investment recovery and firmer exports, supported by improved global trade and recent currency depreciations.

“Asia and the Pacific 2013 growth will come in below earlier projections due to more moderate activity in the region’s two largest economies and effects of QE nervousness,” said ADB Chief Economist Changyong Rhee. “While economic activity will edge back up in 2014, current conditions highlight the need for the region to exercise vigilance to safeguard financial stability in the short term while accelerating structural reforms to sustain economic growth in the longer term.”

China's growth is expected to moderate to 7.6 per cent in 2013 from 7.7 per cent last year. The authorities there are engineering a medium-term transition to a more sustainable growth path than one led by exports and investment.

India’s growth is forecast to slow to 4.7 per cent in FY2013 (ending 31 March 2014) from 5.0 per cent in FY2012. Persistent supply-side bottlenecks such as poor infrastructure and long delays in structural reform keep industry and investment lagging.

East Asia sees growth softer than expected. Growth in East Asia is projected at 6.6 per cent in both 2013 and 2014, below the 7.1 per cent forecast in April for both years.

South Asia is downgraded mainly because of a slowdown in India. The subregional growth forecast is lowered by 1 percentage point, to 4.7 per cent from 5.7 per cent in 2013, and by less in 2014, to 5.5 per cent from 6.2 per cent.

Inflation in developing Asia is projected dipping to 3.6 per cent this year from 3.7 per cent in 2012 as weaker growth and tepid commodity prices keep price pressures in check. Next year, inflation is expected to return to 3.7 per cent. 

Developing Asia’s long-standing current account surplus is expected to narrow from 1.8 per cent of GDP in 2012 to 1.6 per cent in both 2013 and 2014.