ADB slightly downgrades SEA growth forecast

MANILA, Philippines - The Asian Development Bank (ADB) has revised its growth outlook slightly downward for Asean and the rest of Southeast Asia.

From a 5.4 percent gross domestic product (GDP) growth outlook for 2013, the multilateral funding institution has scaled down its forecast to 5.2 percent, it said in a report.

But it noted that the Philippine remained strong, with its higher-than expected first quarter economic growth of 7.8 percent “as domestic demand was buoyed by accelerated public and private investment and stable remittance inflows.”

ADB senior economist for the Philippine country office Norio Usui said they are sticking to their growth forecast of six percent this year and 5.9 percent in 2014.

“The Philippines is expected to experience robust growth for the next two years buoyed on strong consumption, increased government and private spending on infrastructure development, amid modest inflationary pressures,” he said.

However, he said the slight downward revision for Southeast Asia was largely attributed to the slowdown of China’s economy.

China’s economic growth forecast was trimmed down to 7.7 percent this year from the original 8.2 percent, while its earlier eight percent rate for 2014 was revised to 7.5 percent.

The reversal of growth outlook, however, was more positive for the developed or industrial economies. It was earlier forecast to expand by one percent this year, and revised upwards to 1.1 percent.

ADB’s outlook of 1.2 percent for Japan improved to 1.8 percent although it was unchanged for the United States at two percent.

The ADB said that despite positive signs, the effect of fiscal tightening – budget sequestration together with increases in payroll taxes and the tax rate on high-income earners – may yet slow consumption growth in the months ahead.

Not surprisingly, the euro zone is now forecast to contract by 0.5 percent from the earlier outlook of negative 0.3 percent.