BANGALORE (Reuters) - Growth in emerging Asian countries will be lacklustre this year and contribute less to the global economy, despite signs of recovery in the region’s major trading partners in the West, Reuters polls showed on Friday.
Much will depend on how China - the world’s second-largest economy - performs. After clocking double-digit growth rates on average over the last three decades, China’s economy has slowed as the government repositions it to rely more on domestic demand.
The consensus from over 200 economists polled April 15-24 was for growth in economies from China to India, Indonesia, Singapore and Thailand to be steady and near last year’s largely lacklustre levels.
That suggests contributions to the world economy from Asia - which for many years drove global growth - may diminish and the road back to strength could be long and slow.
These latest results are similar to a Reuters poll published last week which showed major global economies will only expand at a modest rate, while other emerging markets - particularly Latin America - are in for a challenging year.
“The region will continue to march forward at a low growth rate - not bad, not great, just what it’s done for the past two years. Grumble, stumble,” David Carbon, head of economic and currency research at DBS Bank, wrote in a note.
The poll results suggest that the run-up in many stock markets over the past few years on hopes for a strong global pickup that has not yet come may have been overdone.
China’s first-quarter growth there weakened to its slowest pace in 18 months, highlighting signs of waning momentum, although the slowdown had been widely expected.
Economists predict a 7.3 percent average growth rate for China this year, which would be the slowest expansion since 1990, and a further cooling to 7.2 percent in 2015.
“Hard landing fears are escalating again even though estimates for GDP growth do not reflect such pessimism,” wrote Carbon.
What remains more of an unknown is how China will manage to ease itself off a credit-fuelled investment binge since the financial crisis hit and how well it will deal with the overhang and subsequent pressure on asset prices.
Policymakers in Beijing are unperturbed and say the modest slowdown is as expected and will continue. But that change has had knock-on effects on other countries in the region, as well as Australia, that fuel China’s appetite for commodities.
The latest poll shows Australia’s economy will expand 2.8 percent in 2014 before picking up slightly to 3.0 percent in 2015. Still, that would be short of the 3.25-3.5 percent pace that in the past has been considered “normal”.
Elsewhere in Asia, growth is expected to be tepid in 2014, with investors pulling funds out of the region and moving them into developed countries as the outlook there improves.
India’s economy is expected to grow at a lacklustre pace of 5.5 percent in the fiscal year 2014/2015. Doubts remain over whether key reforms will be pushed through even if a business-friendly opposition party wins national elections in May.
“If we get into a situation where again the (new) government, because of coalition politics, is not able to implement good policies - then that is the biggest risk,” said Anubhuti Sahay, senior economist at Standard Chartered Bank.
“We have seen such situations since 2010.”
Polling by bureaus across Asia; Additional reporting by Ashrith Rao Doddi in Bangalore; Editing by Kim Coghill