Growth in developing Asia remains robust but is now expected to moderate more than forecast in Asian Development Outlook 2019. This Update projects that the region will grow by 5.4% this year, or 0.3 percentage points below the April forecast, and that growth will edge up to 5.5% next year, or 0.1 points lower than earlier forecast.
Excluding high-income newly industrialized economies, the region is expected to grow by 6.0% this year and next. Inflation should pick up slightly but remain subdued.
Downward revisions to the regional growth outlook stem largely from escalating trade tensions, which have affected in particular the more open economies of East and Southeast Asia. Also dampening the growth outlook are deteriorating prospects in the advanced economies and declining investment in developing Asia.
Downside risks to the region’s prospects have intensified. The trade conflict may yet intensify, possibly moving beyond tariffs. Evidence already shows it reshaping trade patterns, supply chains, and foreign investment.
Taking a longer view, this Update examines the growing importance of cities in developing Asia. It highlights rapid urbanization in the region and its potential to deliver sustained income and job growth. To function well as labor markets and fulfill their promise, cities need to upgrade their transport systems, plan urban expansion better, and enlarge the supply of adequate and affordable homes. Crucially, cities need to ensure that they are environmentally sustainable.