The Manila-based organisation says China will only grow by 6.8% this year, down from 7.2%, blaming weaker exports and investment

This article is more than 5 years old

This article is more than 5 years old

The Asian Development Bank has cut its growth forecast for the region’s biggest economies, citing a softer outlook for China and India and a delayed recovery in the world’s advanced nations.

The Manila-based organisation said in a report on Tuesday that it now predicts the region’s economies will expand 5.8% this year and 6% next year, down from the 6.3% it forecast in March for both years.

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The report, which covers 45 countries, cut forecasts for some of the region’s biggest economies including China, India, South Korea and Indonesia.

ADB’s chief economist Shang-jin Wei said: “Developing Asia is expected to continue to be the largest contributing region to global growth despite the moderation, but there are a number of headwinds in play.”

The Chinese economy, which grew a revised 7.3% last year, is now tipped to slow to 6.8% growth in 2015 and 6.7% in 2016. The bank previously forecast 7.2% and 7%.

“Despite robust consumption demand, economic activity fell short of expectations in the first eight months of the year as investments and exports underperformed” in China, the report said. ADB said it expected the pressure to ease once the recovery in the world’s advanced economies picks up, strengthening global demand.

Much of China’s slowdown is self-imposed as part of the ruling Communist party’s effort to replace a worn-out model based on trade and investment with more self-sustaining growth driven by domestic consumption.

India is forecast to grow 7.4% in 2015 and 7.8% in 2016. The bank trimmed both forecasts by 0.4 percentage points, citing slower progress on major reforms, which has hindered investment, and sagging exports.

Despite the concerns about growth, the region’s stock markets rose on Tuesday. The Nikkei was closed for the Japanese autumn holiday, but the Shanghai Composite was up more than 1%, the Hang Seng was up 0.7% and the S&P/ASX200 in Australia was also up 0.6%.