China and India keep Asia growth stable
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.