According to the predictions and calculations of the Asian Development Bank, which released a report on Wednesday, there would be stunted growth in the Chinese economy in 2018 even as the bank expects a faster than expected growth for the second largest economy of the world this year driven by resilient consumption.
There are expectations by the bank that the Chinese mainland economy would grow by about 6.8 per cent this year. This is a revision of the bank’s estimates which had earlier forecast a 6.7 per cent growth. This was stated by the ADB on Wednesday.
There has been reasonable spending by the average household in China till now this year and this had prompted the bank to review and upgrade its growth prospects for the Chinese economy. However, in the next year, there are expected to be headwinds which would weigh in on the economic growth.
Joseph Zveglich, ADB’s macroeconomic research director said that “controlled moderation” in the economy would result in the slowdown of the world’s second-largest economy which is expected to register growth of 6.4 percent in 2018. According to World Bank data, that rate of growth would be the slowest for the economy since 1990.
A precarious balance is being attempted to be achieved by the Chinese government where it is striving to balance deleveraging and upholding the economy that is debt-fueled.
Compared to the current year, the rest of the region would register a better growth. The ADB said that growth in 2017 in the developing economies in Asia were boosted by higher domestic consumption and rising exports that are stronger-than-expected.
The ABD also upgraded its outlook for the developing region in Asia as the bank predicted that the growth in his region would rise by 0.1 per cent in 2017 to touch 6 per cent. China, Hong Kong, South Korea and Singapore are included in the region along with 41 other countries but does not include Japan.
A year earlier there were fears of a slowdown in the region due to trade protectionism and this year’s’ prediction is much better compared to that.
There was “stronger-than-expected growth in most of our economies especially in terms of the pickup in trade,” Zveglich said.
Developing Asia has been accorded a growth rate of 5.8 per cent by the bank.
The bank also retained its growth expectations for the U.S. at 2.2 per cent for the current year and predicted a growth of 2.4 per cent next year.
He added that as of yet, no economic implications have been registered due to the North Korean crisis even though the ADB is continuously monitoring the situation.
(Adapted from CNBC)