ADB es­ti­mates 5.9 per cent growth in Asia

Times of Oman - - MARKET -

MANILA: De­vel­op­ing Asia is on track to grow faster this year and next, the Asian De­vel­op­ment Bank (ADB) said on Tues­day, buoyed by a pick-up in world trade and China’s ex­pan­sion, but it flagged risks from tight­en­ing US mone­tary pol­icy.

De­vel­op­ing Asia is ex­pected to grow by 5.9 and 5.8 per cent in 2017 and 2018, re­spec­tively, the Manila-based lender said.

That is un­changed from its July es­ti­mates, but higher than the 5.7 per cent fore­cast it gave for both years in its Asian De­vel­op­ment Out­look (ADO) re­leased in April.

Chi­nese growth at 6.7%

China is ex­pected to grow 6.7 per cent this year and 6.4 per cent next year, the ADB said, un­changed from its July es­ti­mates.

“Growth prospects for de­vel­op­ing Asia are look­ing up, bol­stered by a re­vival in world trade and strong mo­men­tum in PRC (China),” ADB Chief Econ­o­mist Ya­suyuki Sawada in a state­ment af­ter the bank up­dated its 2017 out­look. Sawada said de­vel­op­ing Asia should take ad­van­tage of favourable short-term eco­nomic prospects to in­vest in in­fra­struc­ture, im­prove pro­duc­tiv­ity and main­tain sound eco­nomic poli­cies to lift long-term growth.

South Asia

How­ever, the ADB trimmed its growth fore­cast for South Asia to 6.7 per cent this year and 7.0 per cent next year, com­pared with es­ti­mates of 7.0 per cent and 7.2 per cent made in July.

In­dia’s growth was seen at 7 per cent and 7.4 per cent for this year and next, weaker than the July fore­casts of 7.4 per cent and 7.6 per cent.

South­east Asia’s econ­omy will grow 5.0 per cent this year and 5.1 per cent next year, stronger than July fore­casts of 4.8 per cent and 5.0 per cent.

Still, the ADB said re­gional pol- icy­mak­ers need to brace for po­ten­tial cap­i­tal out­flows and higher bor­row­ing costs as the Fed­eral Re­serve be­gins the un­wind­ing of a decade of ag­gres­sive mone­tary stim­u­lus and con­tin­ues to raise in­ter­est rates.

“Be­cause long-term in­ter­est rates in many Asian economies are closely linked to those in the US, pol­i­cy­mak­ers need to strengthen their fi­nan­cial po­si­tions fur­ther and mon­i­tor debt lev­els and as­set prices,” the ADB said.

The ADB said In­done­sia, Malaysia, Thai­land and Tai­wan could ben­e­fit from a boost in ac­com­moda­tive pol­icy, but in­ten­si­fy­ing in­fla­tion­ary pres­sures make the case for stim­u­lus in the Philip­pines and South Korea less clear. In­fla­tion in the re­gion was fore­cast to be slightly slower at 2.4 per cent this year and 2.9 per cent next year, com­pared with the 2.6 per cent and 3.0 per cent es­ti­mated in July.

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