MANILA, Philippines - The Asian Development Bank cut growth forecast for developing Asia on Thursday, citing Europe's worsening financial crisis, sluggish recovery in the U.S. and slower growth in China and India.
The Manila-based lending institution predicted that the region's economies will expand by 6.6 per cent this year and 7.1 per cent next year. The figures are lower than the bank's growth outlook announced in April of 6.9 per cent this year and 7.3 per cent in 2013.
The report said economic growth in developing Asia moderated during the first half of 2012 as slower growth in the United States and the eurozone reduced demand for the region's exports.
"Worries over the economic strength of important developing economies have also emerged recently," it added.
Slower growth in Asia's two largest economies, China and India, and the effects of the unwinding of policy stimulus in some countries hampered the region's development in the first half of the year, the bank said.
It lowered the 2012 growth outlook for China from 8.5 per cent to 8.2 per cent, and next year's growth from 8.7 per cent to 8.5 per cent.
The report noted a fall in China's net exports, industrial production and fixed asset investment. But it said government spending on health, education and big infrastructure projects should give its economy some boost.
India's outlook is clouded by a combination of high inflation and poor external and internal demand, with the economy expected to grow 6.5 per cent this year and 7.3 per cent next year. That's down from the earlier forecast of 7 per cent for 2012 and 7.5 per cent for 2013.
The report said the weaker global environment is expected to affect growth in Southeast Asia but domestic demand and reconstruction activities should keep the economic output robust. The economies are seen to post growth of 5.2 per cent in 2012 and 5.6 per cent in 2013, virtually unchanged from April.
A strong rebound in Thailand, healthy growth in the Philippines, and increasing consumer demand in Indonesia have aided the Southeast Asian economies, the bank said.
Forty-five economies in Asia and the Pacific make up developing Asia.