Asia’s Stifled Services
MANILA – The eurozone crisis has dominated discussion among policymakers over the last few years, but the economic slowdown in Asia’s two giants – the People’s Republic of China (PRC) and India – has become a source of growing public concern as well. How worried should we be about an additional drag on the global economy?
After years of double-digit GDP growth, the PRC’s economy is decelerating. At the Asian Development Bank, we predict that its growth will slow to 7.7% this year, from 9.3% in 2011. The PRC’s population is aging, real wages are rising, and growth is moderating toward more sustainable rates.
India, too, has massive potential to grow fast and reap a demographic dividend, but it has been struggling with structural reform. We expect that India’s expansion will slow to 5.6% in 2012, from 6.5% last year.