Asian Development Outlook (ADO) 2019 Supplement: Growth Slows Further in Developing Asia’s Giants

Excluding newly industrialized economies, regional growth forecasts are revised down to 5.7% for both 2019 and 2020. Regional inflation projections are revised up to 2.8% for 2019 and 3.1% for 2020 as African swine fever continues to elevate pork prices. Elusive trade conflict resolution weighs on sentiment and activity in the region, with further delay still the foremost downside risk to the forecasts.

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Highlights

• Growth forecasts for East Asia are downgraded to 5.4% in 2019 and 5.2% in 2020 as the People’s Republic of China and the Republic of Korea endure continuing trade tensions and slowing domestic investment—as does Hong Kong, China, where political unrest is another factor.
• Growth projections for South Asia are lowered to 5.1% in 2019 and 6.1% in 2020. Growth in India is expected to slow to 5.1% in 2019 as the foundering of a major nonbanking financial company in 2018 led to a rise in risk aversion in the financial sector and a credit crunch. Also, consumption was affected by slow job growth and rural distress aggravated by poor harvest. Policy support will help growth recover to 6.5% in 2020.
• Southeast Asia’s growth forecast is revised down slightly to 4.4% for 2019, as economic weakening in Singapore and Thailand prompts downward adjustments to their growth forecasts. Projected subregional growth in 2020 is maintained at 4.7%.
• An improved outlook in Kazakhstan encourages upward revisions to 2019 and 2020 growth projections for Central Asia, but forecasts for the Pacific are lowered as expansion in Fiji falls short of earlier projections.
• Notwithstanding subdued global oil and food prices, regional inflation projections are revised up to 2.8% for 2019 and 3.1% for 2020 as African swine fever continues to elevate pork prices.
• Elusive trade conflict resolution weighs on sentiment and activity in the region, with further delay still the foremost downside risk to the forecasts.