ASIAN Development Bank (ADB) raised its 2018 economic growth estimate for developing Asia to 6 percent from 5.8 percent, citing solid export demand, but said U.S. protectionist measures and any retaliation against them could undermine trade.

Growth in developing Asia would only ease slightly to 5.9 percent in 2019, the bank said in its 2018 Asian Development Outlook released yesterday. Strong external and domestic demand helped economies in the region expand by an average 6.1 percent last year.

While protectionist trade measures by the United States so far this year have yet to dent trade flows to and from Asia, the risks are there, the Manila-based institution said.

China has blamed the United States for trade frictions amid escalating threats of tariffs on billions of dollars worth of goods between the world’s two biggest economies.

Another risk to Asia’s growth, ADB said, is “diminishing capital inflows if the U.S. Federal Reserve needs to raise interest rates faster than markets expect.” The Fed last raised rates in March and policymakers signaled two or three more hikes this year.

ADB now expects China’s economy to grow 6.6 percent this year, faster than the bank’s prior estimate of 6.4 percent made in December, and by 6.4 percent in 2019.

China has set a growth target of around 6.5 percent this year, the same as last year, which it handily beat with an expansion of 6.9 percent.

China’s growth will moderate “as economic policy leans further toward financial stability and a more sustainable growth trajectory,” ADB said.

By region, South Asia will remain the fastest growing in Asia Pacific, with ADB pegging expansion this year at 7 percent and 7.2 percent in 2019.

Despite growth easing to 6.6 percent in 2017, India’s economy is projected to bounce back to 7.3 percent in 2018 and to 7.6 percent in 2019 as the country’s new tax regime improves productivity, ADB said.

(SD-Agencies)