ADB trims growth forecast for developing Asia

MANILA - The Asian Development Bank (ADB) downscaled this year's growth forecast for developing Asia to 6.3 percent due to easing growth in China and weakness in the United States and European economies.

In April, the ADB has predicted the region to grow at 6.6 percent.

In its latest report issued Tuesday, the Manila-based lender estimated that China, developing Asia's largest economy, would post a 7.7 percent growth rate this year compared to last year's 7.8 percent.

The ADB said weaker-than-expected first half growth of the year and tighter credit dampened growth expectation for China.

"The drop in trade and scaling back of investment are part of a more balanced growth path for China, and the knock-on effect of its slower pace is definitely a concern for the region," ADB Chief Economist Changyong Rhee said in a statement.

Weak export demand, owing to slower growth in the United States and Europe, weigh on the growth outlook, especially in the Southeast Asia region. The five largest economies in the Association of Southeast Asian Nations are seen to grow by 5.2 percent in 2013.

In India, slow progress in pushing through the reforms needed to ease business bottlenecks is hurting the country's growth prospects. The ADB forecasts India's GDP growth to ease to 5.8 percent this year, from the previous forecast of 6 percent.

Elsewhere in South Asia, Sri Lanka will continue to grow strongly while other parts of the region will see softer than anticipated growth.

The ADB has also trimmed forecasts for Central Asia, reflecting the sluggish economic performance of Kazakhstan and Georgia, and for the Pacific where East Timor is seeing a slowdown in government spending.