ADB cuts growth forecasts for developing Asia

The Asian Development Bank (ADB) trimmed its economic growth forecast for the Asia-Pacific region amid slower growth in China and tepid demand from major industrial economies.

The Asian Development Bank (ADB) said it had lowered its growth forecasts for developing Asia this year and the next as a softer outlook for China meant subdued economic activity elsewhere in the region.

The bank lowered its growth forecast for developing Asia by 0.3 percentage points to 6.3 percent in 2013 and 6.4 percent in 2014, the Manila-based development lender said in a supplement to its Asian Development Outlook 2013, which was first released in April. It cut its growth estimates for China by 0.5 percentage points to 7.7 percent and 7.5 percent this year and the next.

Data shows investment growth slowed in May and is expected to weaken further with financial institutions becoming more averse to risk following turbulence in its domestic interbank money market.

"The drop in trade and scaling back of investment are part of a more balanced growth path for (China), and the knock-on effect of its slower pace is definitely a concern for the region," said ADB chief economist Changyong Rhee. "We are also seeing more subdued activity across much of developing Asia."

China reported last Monday that annual gross domestic product growth slowed to 7.5 percent from April to June, the ninth quarter in the last 10 that expansion has weakened, putting pressure on Beijing to quicken reforms rather than slow them to take up the economic slack.

The ADB also lowered for the second time this year its forecast for India to 5.8 percent from its April estimate of 6 percent, with growth still constrained by supply-side bottlenecks and sluggish progress in pushing through structural reforms.

Southeast Asia's growth is expected to be slightly lower than previously expected, mainly due to softer demand from China.

However, the sub-region is likely to buck the regional trend of softer-than-expected price pressures largely due to a 44 percent jump in subsidised oil prices in Indonesia last month.