The organization’s overall assessment of the region:
Growth is now expected to slide from 7.2% in 2011 to 6.1% in 2012, with a bounce back to 6.7% in 2013.
The new report assessed the prospects of several nations that are now high on the ladder of worldwide gross domestic product by nation:
The PRC is forecast to grow by 7.7% this year and by 8.1% in 2013, considerably more slowly than the robust 9.3% growth of 2011;
India will see GDP growth slow to 5.6% in 2012 and bounce back to 6.7% in 2013.
The prediction about China is among the most pessimistic issued by a major finance or economic organization. In July, the International Monetary Fund lowered its forecast for 2012 GDP growth in China to 8.0% from its previous forecast of 8.2% in April. It dropped its estimate of 2013’s growth rate to 8.5% from 8.8% previous. The ADB forecast may only be better because it is more recent. Both predictions beg the question of what forecasts will look like at the end of the year. A 7.7% figure is not very far from 7%, and based on China’s services and factory PMI data, the People’s Republic’s economy has slowed month-by-month all year.
The ADB and IMF analyses bring up the matter again of what constitutes a recession in China. It is probably not the classic developed world definition of two consecutive quarters of GDP contraction. China’s factories, infrastructure and middle-class compensation will break down quickly if exports and wage growth fall below what is considered the normal growth rate of near 10%. It is an economy built for speed and momentum, and, as such, is not prepared for a year or more of sluggishness.
Douglas A. McIntyre
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