China and In­dia keep Asia growth sta­ble

The Myanmar Times - - International Business -

THE Asian Devel­op­ment Bank said yes­ter­day that growth across the re­gion was hold­ing sta­ble de­spite global head­winds, with re­silience in China and In­dia keep­ing it on track.

GDP for de­vel­op­ing Asia is pre­dicted to grow 5.7 per­cent in 2016 and 2017, ac­cord­ing to the bank’s lat­est re­port – down slightly from 5.9pc in 2015.

“Strong growth in the PRC [China] and In­dia is help­ing the re­gion main­tain its growth mo­men­tum,” said ADB’s deputy chief economist Juzhong Zhuang.

“Still, pol­i­cy­mak­ers need to watch for the down­side risks in­clud­ing po­ten­tial cap­i­tal re­ver­sals that could be trig­gered by mon­e­tary pol­icy changes in ad­vanced economies, es­pe­cially the United States.”

Al­though China growth has dropped from 6.9pc last year, its per­for­mance so far in 2016 sur­passed the bank’s pre­vi­ous fore­cast, with fis­cal and mon­e­tary stim­u­lus mea­sures be­hind the in­crease, the re­port said.

The bank re­vised up slightly its pre­dic­tions for China growth to 6.6pc in 2016 and 6.4pc in 2017. Both fig­ures are up 0.1pc from the bank’s pre­vi­ous re­port in March.

In­dia saw a boost to pri­vate con­sump­tion af­ter re­cently ap­proved in­creases in wages and pen­sions, and a healthy mon­soon is likely to lift ru­ral in­comes, the ADB said.

It main­tained its growth fore­cast for In­dia at 7.4pc for 2016 and 7.8pc for 2017, with im­prove­ments driven by a re­cov­ery in pri­vate in­vest­ment and bank re­forms.

How­ever, a slow re­cov­ery in the United States, the eu­ro­zone and Ja­pan will still weigh on the re­gion, with ques­tion marks over mon­e­tary pol­icy in those ar­eas.

The re­port de­scribed risks to the re­gional out­look as “tilted to the down­side”, with the pos­si­bil­ity of a US Fed­eral Re­serve rate hike a pos­si­ble threat to cap­i­tal flows.

The ADB also warned pol­i­cy­mak­ers against any move to­ward pro­tec­tion­ism which it said “would only un­der­mine the re­cov­ery”.

Look­ing to the fu­ture, the Mani­l­abased re­gional bank said it was in­creas­ingly im­por­tant for de­vel­op­ing Asia to cut its car­bon emis­sions, which went from 25pc of the global to­tal in 1990–1999 to 40pc in 2012.

The ef­fects of cli­mate change, from shorter rainy sea­sons to droughts and out­breaks of dis­ease could be cat­a­strophic if unchecked, it said.

“If un­con­trolled, cli­mate change may lead to eco­nomic loss equiv­a­lent to 10pc of GDP in 2100, re­vers­ing many hard-won so­cioe­co­nomic gains in the re­gion,” the re­port said.

The ADB pro­motes so­cial and eco­nomic devel­op­ment in Asia and has 67 mem­bers, 48 from the re­gion.

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