0221 GMT April 06, 2020
The US-China trade war and a slowdown in global import-export traffic are taking a toll on economic growth in developing Asia, prompting the Asian Development Bank to cut its forecasts for the region. The Manila-based regional lender now expects to see 5.5-percent growth in 2020 for developing Asia, a group of 45 economies that includes China and India but not Japan.
The ADB said prolonged trade tensions are still the primary risk to the region’s outlook, but a handful of countries are expected to outperform their neighbors next year.
These are the economies it said will grow the fastest in 2020:
Bangladesh is forecast to add another eight percent to its GDP on the back of increased foreign investment in low-cost textiles, garments and shoes. The country has grown at least six percent per year since 2011.
Wages that average just $101 per month help bring in some of that investment. Domestic demand and higher living standards add to the South Asian country’s growth, said Rajiv Biswas, Asia Pacific chief economist with the market research firm IHS Markit. Foreign direct investment rose 19.5 percent in the first half of 2019 to $1.7 billion on growing ease of doing business, according to local media reports.
India should grow 7.2 percent as it seeks to become a new powerhouse for manufactured goods including electronics, per government policy. A 7.2 percent GDP growth rate would mark a fall from 8.17 percent in 2016, and hover near levels of the past two years, World Bank figures showed.
A decline in output for eight core industries, some of which face a lack of credit, would stop the economy from growing faster in 2020. However, the central bank has offered monetary stimulus and a tax cut this year for a bit of relief.
Tajikistan is forecast to grow seven percent as the former Soviet republic gets a boost from its gold and silver mines, metal processing and remittances from about a million citizens who live abroad. Tajikistan’s GDP had expanded 6.9 percent in 2016, 7.1 percent the following year and 7.3 percent last year. ‘Industry and services’ has led growth along with ‘buoyant’ domestic demand, the World Bank said.
Myanmar’s economy should grow 6.8 percent. This country with a GDP of just $67 billion is starting from a low base. “Myanmar’s manufacturing export sector has been growing rapidly over the past five years, which is helping to support rapid economic growth,” Biswas said.
The Southeast Asian country been transitioning to a civilian-led government and adopting economic reforms aimed at attracting more investment. Infrastructure outlays and consumer spending are coming in behind the factory investment to raise the GDP. The economy has expanded accordingly at more than 6.5 percent annually over the past three years.
Cambodia is expected to grow 6.8 percent. China’s investment in Cambodia has accelerated the GDP of this Southeast Asian country of 16.5 million people, piggybacking on a pickup in garment manufacturing like that seen in Myanmar and Bangladesh.
Chinese investors are adding real estate, coastal resorts and infrastructure such as roads and, eventually, two airports. China had invested some $2 billion in Cambodian infrastructure as of 2018. But 6.8 percent growth would fail Cambodia’s 7 percent-plus growth as logged by the World Bank every year since 2011.
Vietnam should grow 6.7 percent next year. The Southeast Asian country that has grown at more than six percent per year since 2012 is doing a lot of what Bangladesh does but shifting into more value-added manufactured goods such as electronics. Foreign investors still power the economy, to wit a 69.1 percent year-on-year increase in direct investment in the first five months of this year to $16.74 billion.
The other developing Asian economies that the ADB forecasts will grow more than six percent include Nepal and the Maldives at 6.3 percent each, Laos and the Philippines both at 6.2 percent and Mongolia at 6.1 percent.
*Ralph Jennings has been reporter, writer, blogger, editor and instructor in China since 1999. The article was published in forbes.com.