MANILA, Philippines (AP) — The Asian Development Bank on Tuesday trimmed its economic growth forecast this year for developing Asia to 5.6 percent.
The revision was slightly below the previous projection of 5.7 percent due to a slight slowdown in India, one of developing Asia's biggest economies. Forecast growth for the entire region next year remains unchanged at 5.7 percent.
ADB said in a report that India's surprise demonetization of large banknotes will likely dampen growth this year to 7 percent from a previous forecast of 7.4 percent. But South Asia is the most dynamic part of the region, with growth expected at 6.6 percent this year, down from the previous forecast of 6.9 percent. South Asia's growth is estimated at 7.3 percent in 2017.
The report says regional giant China is on course to grow 6.6 percent this year and 6.4 percent in 2017.
East Asia as a whole is seen to expand by 5.8 percent this year and 5.6 percent in 2017 as growth stabilizes in line with earlier forecasts.
The report said growth in the major Southeast Asian economies in the third quarter met projections and even surpassed them in Malaysia and the Philippines. The sub-region is forecast to expand by 4.5 percent in 2016, and picking up to 4.6 percent in 2017.
"Asian economies continue their robust expansion in the face of global economic uncertainties," said ADB Deputy Chief Economist Juzhong Zhuang. "Structural reforms to boost productivity, improve investment climate, and support domestic demand can help maintain growth momentum."
ADB said the combined growth for the major industrial economies exceeded expectations, ticking up 0.1 percentage point to 1.5 percent in 2016. The growth forecast for 2017 is maintained at 1.8 percent, with robust consumer spending supporting the U.S. economy, and monetary policy and improved labor markets fueling growth in the euro area.
Japan's expansion, meanwhile, will be buoyed by strong exports, despite a stronger currency, the report said.