Asia’s growth outlook has taken a haircut from slowdowns in China and India as well as developed markets’ soft recovery, the Asian Development Bank (ADB) said in a new report, cutting its forecasts for the region.
“The first half of 2015 has been softer than expected across the board,” the ADB said, citing harsh winter weather and labor disputes at the U.S.’s West Coast ports and Japan’s weak economic recovery as key impacts on growth. “Emerging markets are facing receding capital flows and depreciating currencies – a trend that may be exacerbated by the upcoming rise in U.S. interest rates.”
The ADB cut the region’s growth outlook to 5.8 percent for 2015 and 6.0 percent for 2016, down from its previous 6.3 percent forecast for both years. That compares with the region’s growth rate of 6.2 percent in 2014.
Read More A weaker currency can sometimes be bad for growth
It isn’t clear how much of a concern the slower growth rate should be. Piyush Gupta, chief executive of DBS, told the Milken Institute’s Asia Summit last week that as economies grow in size “a glide path of slower growth” was to be expected. With China on a path to slower growth, the region’s exports, particularly of commodities, are taking a hit, he noted.
But he added: “China at 5-6 percent [growth] still puts a Germany on the map every four years. It’s not negative growth. It’s still creating massive demand. But it might not be enough.”
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.