|China credit policies could weigh on outlook for regional economies, ADB predicts
The Asian Development Bank predicted growth in developing Asia will edge higher over the next two years, but could be constrained by China's campaign to slow growth.
ADB forecast its Asian Development Outlook 2014 that adjustments in China, could offset improving demand as growth picks up in advanced economies such as the United States, Europe and Japan.
The ADB estimated that gross domestic product for developing Asia, which covers 45 nations, will grow 6.2 percent this year before edging up to 6.4 percent in 2015. Last year the region expanded by 6.1 percent, AFP reports.
“At this rate developing Asia will remain the fastest-growing region in the world and the largest contributor to global growth,'' ADB deputy chief economist Zhuang Juzhong said in Hong Kong.
But East Asia’s growth trend will flatten as growth moderates in China, the ADB said citing China’s efforts to control credit growth.
“The regional growth outlook depends on continued recovery in the major industrial economies and on China managing to contain internal credit growth smoothly.''
The ADB expects China's economic growth to slow to 7.5 percent this year, and a further drop to 7.4 percent in 2015, from 7.7 percent last year.
“The government continues to shift priority towards quality of growth, this may slow China's growth in the short term but will make growth more sustainable in the longer term,'' Zhuang said.
At a separate briefing in Beijing, ADB economists said China's efforts to rebalance its economy are bearing fruit.
China's service sector grew more strongly last year than did industry and now accounts for a larger share of GDP, said Jurgen Conrad, who heads the ADB's economics unit in Beijing.
He described that as “a major achievement from the point of view of domestic rebalancing,’’ though added the economy was still mainly driven by investment growth even as consumption showed strength.
The ADB forecast the South Asia region to grow by 5.3 percent this year, relying on continuing reform in India which is “operating below its potential'' with a forecast 5.5 percent expansion in 2014.