Growth in developing Asia would be likely slower than earlier thought with a slowdown in China's economy hurting demand, the Asian Development Bank said. It called on policymakers in the region to strengthen financial-system buffers against external shock.
Asian development was now pegged at 5.8 per cent and 6.1 per cent this year and in 2016, down from the ADB's July forecast of 6.1 per cent and 6.2 per cent, according to the bank's 2015 outlook update released today.
Growth in the region, with included 45 countries in Asia-Pacific, came in at 6.2 per cent in 2014.
The Manila-based bank also cut its growth estimate for East Asia to 6.0 per cent for this year and next, from its earlier forecast of 6.2 for both years, with China likely missing its growth target of around 7 per cent this year.
Growth in China is projected to be 6.8 per cent this year from 7.3 per cent in 2014, and would slow further to 6.7 per cent in 2016.
Concerns of a China-led global slowdown, sending global stock markets tumbling had led the US Federal Reserve last week to not hike interest rates for the first time in almost a decade.
ADB's chief economist Shang-jin Wei said, ''Developing Asia is expected to continue to be the largest contributing region to global growth despite the moderation, but there are a number of headwinds in play.''
''Despite robust consumption demand, economic activity fell short of expectations in the first eight months of the year as investments and exports underperformed'' in China, the report said.
According to the ADB, the pressure is likely to ease once the recovery in the world's advanced economies picked up, strengthening global demand.
According to commentators, China's slowdown was largely self-imposed as part of the ruling Communist party's effort to replace a worn-out model based on trade and investment with more self-sustaining growth driven by domestic consumption.
The Indian economy would grow 7.4 per cent in 2015 and 7.8 per cent in 2016, ADB said.
The bank cut both forecasts by 0.4 percentage points, citing slower progress on major reforms, which had hindered investment.