Now for a string of downgrades on global economic growth over the next month after the Asian Development Bank kicked them off yesterday with cuts to GDP forecasts for this year and 2017.
The update will be followed next month by The World Bank and the IMF ahead of the Spring meetings of the Bank and the Fund.
The IMF has already indicated that it will probably cut its global and some country forecasts in its World Economic Outlook, to be released in about a fortnight.
The ADB forecast regional growth of 5.7% for this year and next, down from 5.9% in 2015 for what it called Developing Asia.
“Developing Asia” is a 45-country grouping used by the ADB that includes central Asia and the Pacific as well as countries in east, south and Southeast Asia. It excludes Japan and Australia and New Zealand.
Central to the ADB’s Asia Development Outlook 2016 forecast tis an expected cut to estimates for China’s growth.
China’s economy is forecast to grow at 6.5% this year and 6.3% next year, compared with Beijing’s expectations of between 6.5% and 7% for 2016 and an average of 6.5% over the next five years.
The ADB cited the weak recovery in major industrial economies and softer growth prospects for China for the downgrade.
“Potential interest rate hikes by the US Federal Reserve combined with broader weakness of emerging markets mean that risks to the regional growth forecast remain tilted to the downside,” notes the bank.
“Heightened investor risk aversion, intensified global financial market volatility, and a sharper-than-forecast growth slowdown in China would further weaken the global outlook and directly hurt regional exports and growth.” China continues to battle excess capacity and needs to move ahead with structural reform, according to the report.
“[China’s] growth moderation and uneven global recovery are weighing down overall growth in Asia,” said Shang-Jin Wei, ADB’s chief economist following the release of the banks latest Asian Development Outlook report. “Despite these pressures, the region will continue to contribute over 60% of total global growth.”
“Due to its outsized linkages, estimates suggest the drag from the growth moderation in China may be as much as 0.3 percentage points across the region,” said the ADB.
Despite expected weakness in China, the ADB thinks India will be one of the fastest growing major economies in the period ahead, predicting that economic growth will slow to 7.4% this year before accelerating to 7.8% in 2017.
Growth in Southeast Asian nations is also tipped to accelerate, rising to 4.5% in 2016 and 4.8% in 2017.
“Regional growth will be led by Indonesia as it ramps up investment in infrastructure and implements policy reforms that spur private investment,” said the ADB.
