MANILA, Philippines (AP) — Softer growth prospects for China and a weak recovery in major industrial economies are expected to push down economic growth in developing Asia to 5.7 percent this year and next, below projections, the Asian Development Bank said Wednesday.
The gross domestic product of the region, made up of 45 countries, grew 5.9 percent in 2015.
China's economic growth is seen moderating to 6.5 percent this year and 6.3 percent next year, compared to 6.9 percent last year, the ADB report said. Slower exports, a falling labor supply and supply-side reforms are reshaping the world's second-largest economy toward more domestic consumption and a further reduction in excess industrial capacity, it said.
The report said that India will remain one of the fastest-growing major economies, while South Asia is forecast to post the most rapid growth among sub-regions. India's economy is seen expanding by 7.4 percent in 2016, and 7.8 percent in 2017. Last year, India's economy grew 7.6 percent on the back of strong public investment.
South Asia's economic growth is projected to slightly dip to 6.9 percent this year, from 7 percent in 2015, but that is seen to accelerate to 7.3 percent in 2017.
Southeast Asia's economy is set for stronger growth at 4.5 percent this year and 4.8 percent next year, up from 4.4 percent in 2015. The region will be led by its biggest economy, Indonesia, as it ramps up investment in infrastructure and implements policy reforms to spur private investment.
"(China's) growth moderation and uneven global recovery are weighing down overall growth in Asia," said Shang-Jin Wei, ADB's chief economist. Still, the region will continue to contribute over 60 percent of total global growth, he said.
Aggregate growth in the United States, the euro area and Japan will stay at 1.8 percent in 2016 and inch up to 1.9 percent in 2017, the report said.
It also cited a United Nations' projection that growth in the region's working-age population will be lower in 2015-2020 than in 2008-2014, and that demographic effect alone could depress developing Asia's potential growth by 0.4 percentage points.