ADB trims Asia’s growth prospects to 6% in 2012 on slack global demand

Reuters: The Asian Development Bank slightly lowered its 2012 and 2013 growth estimates for developing Asia on Friday as frail global demand drags on the region despite indications that China’s economy has bottomed out.

The ADB’s update to its Asian Development outlook pared back its October growth forecasts for developing Asia, which excludes Japan, by 0.1% to 6.0% for this year and 6.6% in 2013.

“Developing Asia’s economic growth is cooling compared with last year’s 7.2%,” said the bank.

The Euro zone, still hobbled by its debt woes and the prospect of a ‘fiscal cliff’ in the US are reasons for continued and considerable uncertainty, according to the ADB.

Within Asia, India’s ‘anaemic’ industrial production and pressure from domestic inflation threaten sluggish growth in the coming quarters. The country’s forecasts were revised from 5.6% to 5.4% in fiscal year 2012, and from 6.7% to 6.5% in fiscal year 2013.

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Growth estimates for China, however, were held at 8.1% for next year on the back of revived industrial production and investment levels.

Despite the rebound in the Chinese economy, weak external demand from major industrial economies and China itself have hit the rest of East Asia, in which the ADB also includes Hong Kong, South Korea, Mongolia and Taiwan. The bank referred to those countries’ growth as ‘meagre,’ cutting its 2012 figure for the region to 6.4% and its 2013 forecast to 7.0%.

Stronger-than-expected results bolstered Southeast Asia, which ‘surprisingly’ saw its 2012 growth estimate slightly upgraded to 5.3%, driven by Malaysia’s domestic demand and expansion in the Philippine services sector and industrial output.

“The other economies in the sub-region are holding up relatively well, except for Singapore’s open economy,” said the bank, describing as ‘sluggish’ the city-state’s 0.3% year-on-year growth in the third quarter.

International food prices, almost back at levels from one year ago, are expected to ease inflationary pressures within developing Asia, particularly in China and Central Asia. Inflation remains a major concern for South Asia, however, with the bank’s forecast for next year at over 4%.

The ADB estimates prices will rise 2% in 2013, “On the assumption of higher meat prices, lower grains production, and higher demand as the global economy slightly improves.”