The Asian Development Bank (ADB) is significantly scaling back 2012 and 2013 growth forecasts for developing Asia, saying that after years of rapid growth, the region must brace for a prolonged period of moderate expansion amidst an ongoing slump in global demand.
This has not spared the global crude oil markets in terms of price fluctuations and a downward revision in prices. Crude oil futures fluctuated after dipping 4.1% yesterday, the most since June, reported Bloomberg. Brent crude for November delivery too fell $3.40 to $108.17 a barrel.
For India, GDP growth will slow to 5.6% in 2012, down from 6.5% in 2011. The downward revision in India’s prospects, due in significant part to weak investment demand, is expected to slow South Asia‘s growth to 5.6% and 6.4% for 2012 and 2013, respectively, according to ADB.
The People’s Republic of China (PRC) is forecast to grow 7.7% this year and 8.1% in 2013, a dramatic drop from the 9.3% posted in 2011. The slowdown in the PRC is having a knock-on effect elsewhere in East Asia, with diminished demand for intraregional exports, the report read.
India and China are heavy consumers of crude oil. China is the second biggest consumer in a list topped by the US.
The ADB report along with the inventory climbing in US by 11,000 barrels a day to 6.52 million last week, according to EIA, dragged the markets down.
Ironically positive data from US in terms of PMI data and job data have not given fillip to the crude oil markets.
The PMI data from US as well as the job data released by ADP portrayed positive image of US markets which strengthened the USD.
US private-sector employment increased by 162,000 from August to September on a seasonally adjusted basis, according to the latest ADP National Employment Report released Wednesday. The forecast was that US economy would add 150,000 jobs in September.
The purchasing managers' index by ISM climbed to 55.1 in September from 53.7 in August. A figure below 50 indicates contraction and above 50 expansion.
The data may have capped further downside in crude oil prices. Nevertheless, it is indicative of a novel geopolitical trend in the making wherein the center of gravity in terms of economic power is shifting to Asia.
ADB projects the region’s gross domestic product (GDP) growth dropping to 6.1% in 2012, and 6.7% in 2013, down significantly from 7.2% in 2011. The markets stressed on this aspect more than the US factor which resulted in a downside in crude oil prices.
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