ADB Lowers 2019 Growth Projection for S. Korea to 2%

Andrew Cummings
December 12, 2019

The Asian Development Bank cut its economic growth forecasts for two of the region's biggest economies to below 6%, dimming prospects across the continent.

The Reserve Bank of India (RBI) in its monetary policy announcement last week revised its FY2019-20 outlook to 5 per cent from 6.1 per cent.

It cut its growth estimates for China for this year and the next to 6.1 per cent and 5.8 per cent, respectively, from the 6.2 per cent and 6 per cent forecasts announced in September, on the US-Sino trade tensions and as higher prices of pork cut into consumer spending. In September, the bank said India's gross domestic product would grow by 7.2% in 2020. In September, ADB forecast GDP growth of 6.2 percent in 2019 and 6.0 percent in 2020. Also, consumption was affected by slow job growth and rural distress aggravated by a poor harvest. "Domestic investment is also weakening in many countries, as business sentiment has declined".

"This is supported by signals from the seven-year low October imports and historically weak absorptive capacity of government agencies involved in infrastructure projects implementation including local government units [LGUs]", the ERU stated.

"The main risks to the outlook are a surprisingly abrupt slump in domestic consumption and any worsening of the global growth slowdown or trade tensions", the report said about Japan.

"Some tentative signs have emerged that the Indian economy is stabilizing in the second half of 2019", the report said.

"Having already slowed year-on-year from 5.8% in Q4 of 2018 to 5% i4n Q1 of 2019, growth fell further to 4.5% in Q2, the lowest quarterly rate since Q4 of 2012", it said.

"Inflation, on the other hand, is ticking up on the back of higher food prices, as African swine fever [ASF] has raised pork prices significantly", he added.

In Southeast Asia, many countries are seeing continued export declines and weaker investment, and growth forecasts have been downgraded for Singapore and Thailand.

Japan, meanwhile, the world's No. 3 economy, is forecast to post 1.0 percent growth this year, down from the initial forecast of 1.2 percent, although its forecast for 2020 is maintained at 0.5 percent.

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