MANILA • The Asian Development Bank (ADB) downgraded economic growth forecasts for India and South- East Asia for 2019 as global risks from trade tensions to Brexit mount.
GDP in India will probably increase 7.2% this year, down from a December forecast of 7.6%, according to the ADB’s latest Asian Development Outlook report. South-East Asia’s growth estimate was cut by 0.2 percentage point to 4.9%.
A drawn-out or deteriorating trade conflict between China and the US could damp investment, the ADB said, while the UK’s potential chaotic exit from the European Union and financial market volatility comes with additional risks.
“With various uncertainties stemming from US fiscal policy and a possible disorderly Brexit, growth in the advanced economies could turn out slower than expected, undermining the outlook” for China and other economies in the region, Yasuyuki Sawada, ADB’s chief economist, said in the report.
China’s growth forecast for 2019 was maintained at 6.3%, with its economy seen slowing to 6.1% in 2020. While the risk of sharp increases in US interest rates seem to have eased, “policymakers must remain vigilant in these uncertain times”, Sawada said.
The biggest economic blocs in developing Asia will see softer consumer price growth this year than previously forecast.
Exchange-rate volatility can be problematic, particularly for nations that rely on dollar debt.
Suitable monetary tools, regional dialogue and deeper domestic markets must be considered to cushion impact of tighter external funding conditions. — Bloomberg