The only two major Asian nations looking better as China slows

A vendor sleeps at a shop in Beijing, in this Nov 17, 2013 file photo.
A vendor sleeps at a shop in Beijing, in this Nov 17, 2013 file photo.PHOTO: REUTERS

MANILA (BLOOMERG) - Not every Asian economy is suffering from China's slowdown.

Bangladesh and Vietnam were the only major economies in the region to see their growth forecasts revised upwards in the Asian Development Bank's latest outlook. Both countries were upgraded to 6.5 per cent growth for this year from a July forecast of 6.1 per cent. The only other economies to receive a positive revision were small pacific island nations.

The two countries have been rare bright spots in an otherwise slowing regional economy that is hurting from China's weakest expansion in 25 years. Much of the improved outlook is due to their attempt to capture a greater slice of low-end, labor-intensive manufacturing that is shifting out of China as wages rise and policy makers look to push up the value chain.

"These are examples of countries that do not need to lose out when Chinese growth slows," said Shang-Jin Wei, chief economist at the Asian Development Bank in Manila.

Bangladesh, home to the world's second largest garment industry, is able to produce textiles at a third of the cost in China, according to its central bank. Garments accounted for more than 80 per cent of its exports and surpassed US$18 billion (S$25.3 billion) in 2014, according to U.S. government data.

Remittances from Bangladeshis working abroad rose to US$1.19 billion in August from US$1.17 billion a year earlier, central bank figures show. They totaled US$14 billion in 2014 and amounted to 8 per cent of GDP, according to the CIA World Factbook.

While Vietnam has a more diversified export base that includes a large electronics sector, it too is picking up demand from companies shifting work out of China to a cheaper base.  The country's growth is expected to accelerate through the second half of this year boosted by rising private consumption, export-oriented manufacturing and foreign investment inflows, according to the ADB. Vietnam's exports from January to August rose 9 per cent compared with the same period last year, government data show.

"Vietnam is very much in the process of improving the investment climate," said Mr Wei.

The ADB lowered its overall forecast for developing Asia to 5.8 per cent from 6.3 per cent as waning Chinese demand for commodities hurt exporters around the region. China's forecast was lowered to 6.8 per cent from 7 per cent.