India the fastest growing giant

Global slowdown to

continue in 2019 and 2020

“We expect moderate growth slowdown to continue in 2019 and 2020”, says Arjen van Dijkhuizen, Senior Economist at ABN AMRO Bank NV inks in, A challenging year, under the Asia Outlook 2019.

Looking ahead, we expect regional GDP growth in annual terms to fall to 6% in 2019 and 5.8% in 2020, down from an average 6.2% in 2018. We expect the slowdown in China, (accounting for around 50% of emerging Asian GDP) to remain gradual. While China’s economy shows more signs of a serious cooling in recent months, the authorities continue with taking all kinds of offsetting measures.

We assume China’s real GDP growth to fall from 6.6% in 2018 to 6.3% in 2019, the lowest level since 1990 (see for more background our China Outlook for 2019, Stimulus offsets trade risks). We expect growth in India - the region’s second largest economy – to remain solid at around 7.5% and India to maintain the status of fastest growing giant, even though India is facing some political uncertainty with elections due in April, is being cited from their previous ink, India Outlook 2019, Modi-fication.

We expect growth in global bellwethers such as Hong Kong and Singapore to slow by around 1%-point compared to the annual average for 2018, reflecting the expected slowdown in global trade and in main export destinations (e.g. US, China). All in all, we expect emerging Asia to remain a key engine of global growth, even though growth is gradually coming down.

By elections in India, Indonesia, Philippines and Thailand ABN AMRO says, 2019 is an important election year for emerging Asia. In India, the world’s largest democracy, general elections to be held in April/May will be an important litmus test for PM Modi.

We expect the ruling National Democratic Alliance to win the elections, but it may well lose its parliamentary majority. As a result, we expect some modification of the reform agenda, but not a breakdown. Still, a big loss in the popular vote may complicate the position of Modi and the NDA in trying to guide further reforms through parliament.