The region is now expected to grow by 5.8% this year and 6% in 2016, revised down from March’s forecast of 6.3% for both years.
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Wei said that the overall outlook for the region was “still positive” but had been impacted by capital flow reversals and weakened commodity prices for exporters, partly related to the China slowdown.
The ADB also warned central banks to prepare for an expected Federal Reserve interest rate rise, with many nations already seeing huge capital outflows as dealers look for better, safer United States investments.
In an update of its flagship annual economic publication, Asian Development Outlook 2015 (ADO 2015), ADB now sees gross domestic product (GDP) growth for the region coming in at 5.8% in 2015 and 6.0% in 2016-below the March forecasts of 6.3% for both years.
It isn’t clear how much of a concern the slower growth rate should be.
Developing Asia’s growth projection for 2015 is to be pressurized due to softer growth prospects of China and India and a slow recovery in the major industrial economies, Asian Development Bank says in a report. “Risks have increased but it is still manageable if countries can implement macroprudential policies to increase their resilience against financial shocks”, said Shang-Jin Wei, the bank’s chief economist, at a press briefing in Hong Kong.
He added that domestic demand appears to be holding up well with an expansion of credit to the private sector in May of more than 30 percent year-on-year, as well as high import growth.
Relatively, the ADB official said the low inflation environment, due in part to the decline in global oil prices, remains an advantage for the economy since hike in commodity prices remain in check.
This growth is likely to continue with foreign direct investment disbursements reaching record levels in the first half of the year, according to the ADB. The forecast for next year of a growth of 6.3 percent was kept.
The ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members-48 from the region.
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The lender said government consumption grew by 3.9 percent from April to June 2015 while public construction rose by 20.4 percent during the same period. They totaled US$14 billion in 2014 and amounted to 8 per cent of GDP, according to the Central Intelligence Agency World Factbook.
