The Asian Development Bank has slashed its forecast for economic growth for 2016 in developing Asia, citing a weaker outlook in China and global headwinds.
Developing Asia is expected to grow by 5.7% in 2016 and 2007, said the lender based in Manila in its most recent report Asian Development Outlook it released early Wednesday.
In its outlook report in December, the ADB forecasted a growth in 2015 across the region of 6%.
The region, which includes 45 countries in the Asia Pacific, expanded in 2015 by 5.9%.
The growth forecast by ADB in China, the second largest economy in the world, will slow this year to 6.5% from the growth of 6.9% in 2015, which was its weakest growth for the past 25 years. Growth is expected to slow even more to just 6.3% for 2017, said ADB.
The bank’s forecast of 2016 for China, down from an estimated 6.7% in December, is at the low end of Beijing’s target of between 6.5% and 7%, although Li Keqiang the Premier pushes forward with reforms and vows they will not lead to a difficult landing for the country.
Weak prices of oil and other types of commodities cast a big shadow over the commodity dependent Asia economies said ADB in its report.
In the U.S., expanding consumption by the private sector and investment is going to be tempered by external demand that is weak, said ADB.
Policymakers in the Federal Reserve cited continuing risks due to the shaky economy globally in the halving of potential rate hike in interest in 2016 to only two.
In India, growth will drop to just 7.4% in 2015 from a growth in 2015 of 7.6%, but should bounce back in 2017 to 7.8% said the ADB.
Across South Asia, the growth forecast for the ADB was 6.9% during 2016 and 7.3% during 2017, versus 2015 growth of 7%.
Southeast Asia economies will grow 4.5% in 2016 and 4.8% in 2017, while East Asia economies will expand 5.7% in 2016 and 5.6% in 2017 and Central Asia economies 2.1% in 2016 and 2.8% in 2017, said the ADB report.