MANILA - Developing Asia is on track to post its slowest annual growth in 16 years this year as it adjusts to China's rebalancing and possible spillovers from global policy uncertainty, the Asian Development Bank said.
The Manila-based lender kept at 5.7 percent this year's growth forecast for developing Asia, which groups 45 countries in the Asia-Pacific region. That would be the region's weakest expansion since it grew 5 percent in 2001.
It forecast Philippine gross domestic product to expand by 6.4 percent this year from 6.9 percent in 2016.
Next year, developing Asia should again grow by 5.7 percent, the ADB said in its 2017 Asia Development Outlook report.
"Developing Asia continues to drive the global economy even as the region adjusts to a more consumption-driven economy in China and looming global risks," said Yasuyuki Sawada, the ADB's chief economist.
Sawada said the region faces "risks from uncertain policy direction in the advanced economies, including the pace of interest rate normalization in the United States."
"While short-term risks seem manageable, regional policymakers should remain vigilant to respond to possible spillover through capital outflows and exchange rate movements," Sawada said.
The Federal Reserve hiked US rates a notch in mid-March, its second tightening in three months. Forecasts from Fed officials suggest a median of two more increases before year-end.
China, which is rebalancing its economy to growth led by consumption rather than exports, is expected to grow 6.5 percent this year, the ADB said. That is better than its December forecast of 6.4 percent, but weaker than the 6.7 percent expansion in 2016.
Growth in China is seen slowing further to 6.2 percent in 2018.
The ADB reduced its 2017 growth forecast for India to 7.4 percent from 7.8 percent and it expects growth there to pick up to 7.6 percent in 2018.
With nearly all economies in Southeast Asia showing an upward trend, the region should expand by a faster 4.8 percent this year and pick up to 5.0 percent next year, the ADB said.
Economies in South Asia are projected to expand by 7 percent in 2017 and 7.2 percent in 2018.
Strong consumer demand and rising global commodity prices could cause the inflation pace in developing Asia to quicken to 3 percent this year and to 3.2 percent in 2018, the ADB said. -- with a report from Jekki Pascual, ABS-CBN News