With China's slowing economy and the shift from manufacturing to service-based industries, the rest of Asia will be more adversely affected than other areas of the world , the Asian Development Bank (ADB) says in a new report.
Asian commodity exporters will continue to be worst affected but other Asian economies with strong trade links to China - Taiwan, Vietnam, Mongolia, South Korea, Hong Kong and Malaysia especially, but also Singapore, Thailand, Indonesia and the Philippines - are vulnerable, the report says.
The decline in China's growth is expected to shave off gross domestic product growth in the rest of developing Asia by around one-third of a percentage point annually over the next two years, and reduce Japan's growth by one-fifth of a point, says the ADB.
That said, worries over a sharp slowdown in China in the near term are exaggerated, says the ADB. But credit booms and busts, housing downturns and financial crises elsewhere suggest that, in a worst-case scenario, China's growth could drop 4.5 percentage points from earlier peaks. Every one percentage point drop in China's growth lowers the prices of coal and metals and also those of oil and natural gas. Tin prices drop 22%, aluminium 12.4%, coal 12.8%, copper 6.7% oil 6.9% and natural gas 4.7%, according to ADB estimates.
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Asian commodity exporters will continue to be worst affected but other Asian economies with strong trade links to China - Taiwan, Vietnam, Mongolia, South Korea, Hong Kong and Malaysia especially, but also Singapore, Thailand, Indonesia and the Philippines - are vulnerable, the report says.
The decline in China's growth is expected to shave off gross domestic product growth in the rest of developing Asia by around one-third of a percentage point annually over the next two years, and reduce Japan's growth by one-fifth of a point, says the ADB.
That said, worries over a sharp slowdown in China in the near term are exaggerated, says the ADB. But credit booms and busts, housing downturns and financial crises elsewhere suggest that, in a worst-case scenario, China's growth could drop 4.5 percentage points from earlier peaks. Every one percentage point drop in China's growth lowers the prices of coal and metals and also those of oil and natural gas. Tin prices drop 22%, aluminium 12.4%, coal 12.8%, copper 6.7% oil 6.9% and natural gas 4.7%, according to ADB estimates.
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