Based in Manilla in the Philippines, the Asian Development Bank (ADB) is an inter-governmental organization and was established in 1966. In common with other regional development banks, its remit is to work towards poverty alleviation and foster sustainable development through the provision of loans, investments, grants, technical and policy assistance to nations in Asia. It staff includes economists, sociologists, engineers, environmental scientists and the intriguingly named “gender experts” amongst other disciplines represented at the bank.
The bank has downgraded its forecast for two major economies within its sphere of influence: China and India. It is likely that a slowdown in these two major regional economies will have a knock-on effect in other regional economies.
According to the latest ADB forecasts, growth in China is expected to come in at 6.8%, below the Chinese government’s own prediction of 7%. They expect the slowdown to continue into next year and are predicting growth of 6.7% in 2016. The Chinese economy was believed to have expanded by 7.3% in 2014, to put these figures in perspective.
ADB expects that the Indian economy will also slow, falling from 7.8% to 7.4%. They attribute the slowdown to weaker demand for Indian goods and services and to a slowed pace of economic reforms within the sub-continent.
As a result of the slackening pace of economic growth in two of the Asian powerhouse economies, the bank is predicting that growth within the region will fall back from a projected figure of 6.3% to 5.8% this year and 6% in 2016 – projected growth was also 6.3% for 2016 in the earlier forecast. Slowing growth in China is likely to affect demand in a raft of Asian economies. Reduction in Chinese demand has already put pressure on commodity prices which is bad news for economies which rely on their export, but could reduce production costs elsewhere in the world. This would continue to keep inflation down and may factor in to decisions of major central banks about when to start the process of normalizing interest rates.
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