Manila: Asia’s emerging economies will slow next year as the global financial crisis saps export demand and capital flows, the Asian Development Bank (ADB) said on Thursday.
In South Asia, economic growth is likely to reach 6.1% as India, the region’s most dynamic economy, reels from direct blows of the financial crisis on its banking system and financial market. Growth in India is seen at 6.5% next year, down from 7% this year.
Swift, decisive action by policymakers will help stem the impact of the crisis, the Manila-based bank said.
“The external economic environment for developing Asia is likely to worsen as major industrial economies contract further, global financial conditions remain constricted, and world trade growth slows sharply,” said the semi-annual report, titled Asia Economic Monitor.
Collective economic growth in developing Asia—a sprawling region that includes 44 economies—is projected to expand 5.8% next year, down from an expected 6.9% this year, the report said.
“2009 is likely to be a difficult year for developing Asia but it will be manageable if countries respond decisively and collectively,” said Jong-Wha Lee, head of the ADB’s office of Regional Economic Integration.
“Swift action by policymakers to stem both the threat to the financial systems and the real economy will allow most of the region’s economies to sustain a healthy if slower expansion,” he added.
Meanwhile, aggregate gross domestic product of East Asia—a sub-region that includes China, Hong Kong, South Korea, Mongolia and Taiwan but not Japan—is projected to grow by 6.2% in 2009, down from an expected 7.4% this year.
After years of rapid growth, China’s economic gallop is expected to slow to 8.2% in 2009 from 9.5% this year. But it will remain the world’s fastest growing economy into next year.