The international financial institution said global economic growth remains sluggish and for 2012 and 2013 will be below the Asian Development Outlook (ADO) 2012 forecast. The euro area debt crisis continues as the primary threat to the global outlook.
For developing Asia, the outlook has dimmed, with GDP growth to reach 6.6% in 2012 and 7.1% in 2013 due to the weak global economic environment and slower growth in China and India.
China’s growth is expected to ease to 8.2% in 2012, as stimulus from its global financial crisis policy response unwinds, with an uptick to 8.5% in 2013 boosted by recent loosening of macroeconomic policies, according to the ADB.
India’s growth is forecast to moderate to 6.5% in 2012 before picking up to 7.3 in 2013 as high inflation and trade deficits make it difficult to ease monetary policy to stimulate demand.
Meanwhile, inflation in developing Asia is projected to moderate to 4.4% given weak outlook on economic growth and the declining trends in international oil and food prices.
Regarding oil, from a peak of US$128 per barrel in late February, the price of Brent crude has remained below the US$100 per barrel mark since early June, representing the steepest decline since 2008. The oil market cooled very rapidly with the price of Brent crude down nearly 18% during May.
Behind the sharp turn in price trend was robust production in Organization of the Petroleum Exporting Countries in recent months and the rise in Organization for Economic Co-operation and Development inventories.
The sharp appreciation of the US dollar and concerns over future oil demand are also contributing factors to the decline.
Other indicators also point to the increasing softness in oil prices and the loosening of the oil market, such as the continued decline in price spreads for Brent crude oil futures, supporting the view that crude oil inventories are increasing and crude oil markets are less tight than earlier this year.
By Hai Minh