Developing Asia is on track to publish its slowest annual growth in 16 years this year, as it adjusts to the rebalancing of China and the possible fallout of The uncertainty of global policy, said the Asian Development Bank.
The Manila-based lender has maintained this year's growth forecast for developing Asia, which includes 45 countries in the Asia-Pacific region, at 5.7%. This would be the region's weakest expansion as it grew by 5.0 percent in 2001.
Next year, developing Asia is expected to continue to grow by 5.7%, said the AfDB in its report on the outlook for Asia in 2017.
"Developing Asia continues to drive the global economy even though the region is adapting to a more consumer-oriented economy in China and at global risks," said Yasuyuki Sawada , Chief economist of the AfDB.
Sawada said the region is facing "risks related to the uncertain political direction in advanced economies, including the pace of normalization of interest rates in the United States"
"While short-term risks seem easy to manage, regional policy-makers should remain vigilant to respond to possible outflows from capital outflows and exchange rate movements," Sawada said.
The Federal Reserve raised rates in the United States up a notch in mid-March, its second tightening in three months. Forecasts by Fed officials suggest a median of two more increases before the end of the year.
China, which rebalances its economy against growth by consumption rather than by export, is expected to grow by 6.5% this year, said the ADB. This is better than its December forecast of 6.4 per cent but lower than the 6.7 per cent growth in 2016. Growth in China is slower at 6.2 per cent 2018.
The ADB has reduced its growth forecasts for India to 7.4% from 7.8% in 2017 to 7.6% in 2018.
With almost all economies in Southeast Asia showing an upward trend, the region is expected to increase by 4.8 per cent this year and pick up to 5.0 per cent next year, The ADB.
The economies in South Asia are expected to increase by 7.0% in 2017 and by 7.2% in 2018.
Strong consumer demand and rising world commodity prices could cause the pace of inflation in developing Asia to reach 3.0% this year, To 3.2% in 2018, the AfDB said.