ADB cuts developing Asia growth forecast to 5.8 pct in 2015

The Asian Development Bank (ADB) has slashed its economic growth forecast for developing Asia this year to 5.8 percent from 6.3 percent forecast in March.

In its updated Asian Development Outlook 2015 released Tuesday, the Manila-based lending agency attributed the "headwinds" in developing Asia on currency pressures and worries about capital outflows.

"In order to be resilient to international interest rate fluctuations and other financial shocks, it is important to implement macroprudential regulations that, for some countries, may entail some capital flow management such as limiting reliance on foreign currency borrowing," said Shang-Jin Wei, ADB chief economist.

For next year, ADB projects gross domestic product (GDP) growth of this region to rebound to 6.0 percent, down from its earlier projection of 6.3 percent.

Soft global commodity prices, including oil and food, are keeping price pressures low with regional inflation projected to decline to 2.3 percent in 2015, from 3.0 percent in 2014, although a pickup is expected in 2016, according to the report.

Net capital outflows from developing Asian markets which gained pace in the first part of 2015, exceeding 125 billion U.S. dollars in the first quarter, remain a concern as investors anticipated a near-term U.S. interest rate hike. As a consequence the region has seen rising risk premiums and weakening exchange rates which could further impede growth momentum, the report said. Endi