Eurozone crisis to hurt Asia's economic expansion

The euro symbol at the European Central Bank. The Europe crisis have likely effects on developing countries. Photo by: UggBoy / CC BY

There’s no question the effects of the crisis in Europe are likely to spill beyond its borders. In developing Asia, this crisis represents a slowdown of economic growth.

That’s according to the Asian Development Bank, which has lowered its 2012 and 2013 growth forecast for the region.

In its latest development outlook for the region, ADB predicts developing Asia will grow 6.6 percent this year and 7.1 percent in 2013. These are lower than the 6.9 percent and 7.3 percent growth forecast released in April.

ADB cited a number of factors for the downgrade, but identified the economic slump in Europe, and in the United States to some extent, as the primary threat to developing Asia’s economy.

“Economic growth in developing Asia moderated during the first half of 2012 as slower growth in the US and euro area reduced demand for the region’s exports,” the report notes.

Oxfam International has earlier warned about the effects of Europe’s crisis on developing countries. The group said a crisis-induced breakup of the eurozone could cost the world’s least developing countries, mostly in sub-Saharan Africa, up to $30 million in lost foreign investment and trade.

What do you think would be the eurozone crisis’ immediate and long-term effects on developing countries?

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    Ivy Mungcal

    As senior staff writer, Ivy Mungcal contributes to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.