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| ADB Headquarters in Manila [PHOTO: ©Eugene Alvin Villar, 2007] |
Hong Kong, China: The Asian Development
Bank has cut its growth forecasts for this year and next in developing Asia
because of weakening global demand and a slowdown in the region's two largest
economies.
In a report Wednesday,
the ADB said emerging Asia should prepare for what it called a “prolonged
period of moderate expansion,” following years of rapid economic growth in the
region.
The Manila-based
lender forecasts emerging Asia to grow 6.1 percent this year and 6.7 percent in
2013. Those figures are significantly lower than its previous estimates of 6.9
percent and 7.3 percent.
“Developing Asia must adapt to a moderate
growth environment, and countries will need to do more to reduce their reliance
on exports, rebalance their sources of growth, and increase their productivity
and efficiency,” said Changyong Rhee, ADB’s Chief Economist. “These measures
are critical if the region is to continue lifting its people out of poverty.”
Rhee says the
unresolved European debt crisis and the looming fiscal cliff in the United
States are the biggest external threats to Asia's economy. To adapt, the bank
suggests that developing Asian countries do more to reduce their reliance on
exports and support domestic growth.
The bank says the
slowdown is most evident in the two regional giants – China and India. China is
expected to grow 7.7 percent this year and 8.1 percent in 2013, a sharp drop
from the 9.3 posted in 2011. India's growth will slow to 5.6 percent in 2012,
down from 6.5 percent a year earlier.
Still, the report said
that no major monetary policy interventions were necessary, saying that most
countries have enough room to use fiscal and monetary tools to respond in the
event of “an extreme shock.”
The bank also said
that slower growth is helping to keep prices in check. It expects inflation to
fall from 5.9 percent in 2011 to 4.2 percent for both 2012 and 2013.