EghtesadOnline: The Asian Development Bank lowered its 2016 growth forecast for developing Asia on Monday, citing the slowing US economy and near-term shocks from Britain's decision to leave the European Union.
Developing Asia, which groups 45 countries in the Asia Pacific region, is now expected to expand 5.6% this year, slightly weaker than a March forecast of 5.7%, the ADB said in a supplement to its Asian Development Outlook 2016, Reuters reported.
The shock British vote in June to secede from the EU has chilled already tepid growth in the eurozone and has shaken global financial markets.
The Manila-based multi-lateral lending agency kept its 2017 growth estimate for the region at 5.7%, however.
"Although the Brexit vote has affected developing Asia's currency and stock markets, its impact on the real economy in the short term is expected to be small," said ADB chief economist Shang-Jin Wei.
"However, in light of the tepid growth prospects in the major industrial economies, policy makers should remain vigilant and be prepared to respond to external shocks to ensure growth in the region remains robust."
The ADB believes China is still on track to grow 6.5% this year and 6.3% in 2017, with government plans to cut excess industrial capacity in the world's second-largest economy expected to weigh on growth next year, reports Financial Tribune.
India's economy is still forecast to grow 7.4% this year and 7.8% in 2017, the ADB said.
The ADB has also revised downward its forecast for Taiwan's economic growth for this year to 1.1%, from 1.6% estimated in March, attributing the adjustment mainly to Taiwan's weak economy in the first quarter.
The growth projection of 1.1% for Taiwan this year is the lowest among the four "Asian Tigers," lagging behind 2.6% for South Korea, 2.2% for Singapore and 1.5% for Hong Kong, according to the report.
In Southeast Asia, growth projections for 2016 and 2017 remain unchanged at 4.5% and 4.8%. Solid performance of most economies in the sub-region for the first half of this year was driven by private consumption, except for Vietnam where a worsening drought caused a contraction in the agricultural sector.
In Central Asia, 2016 growth forecast was trimmed to 1.7% from 2.1%, and for 2017 it was cut to 2.7% from 2.8% due to a slump in revenues from hydrocarbon exports of Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan and the recession in Russia.
Growth this year in the Pacific is expected to slow to 3.9% from 7.1% in 2015, with the Fijian economy reeling from Cyclone Winston. But stronger-than-expected tourism receipts are boosting the economies of Cook Islands and Samoa while post-cyclone reconstruction is helping Vanuatu's economy.