ADB sees stable growth continuing in developing Asia
MANILA The Asian Development Bank maintained yesterday its stable growth outlook for developing Asia this year and next, saying the region remains the fastest- growing economy globally despite slower- than- expected growth in major industrial countries.
In an update of its annual economic publication Asian Development Outlook 2014 released yesterday, the Manila-based bank kept its forecasts for growth of gross domestic product for the region at 6.2 per cent in 2014 and 6.4 per cent in 2015.
The region, which comprises the 45 ADB developing member countries, grew 6.1 per cent in 2013.
Developing Asia is maintaining its growth momentum, even as the pace of recovery among the major industrial economies falls short of expectations, ADB President Takehiko Nakao, in a foreword to the report, said.
He added developing Asia remains on track to meet the banks April growth forecasts from 6.1 per cent in 2013 to 6.2 per cent in 2014 and 6.4 per cent in 2015.
ADB economist ShangJin Wei said slowing external demand has hurt some economies in the region, but as a whole Asia and the Pacific is on track for firm growth in 2014 and 2015.
Moving forward structural reform processes in China, India, and Indonesia, the regions three biggest economies, will be critical in shaping the growth outlook, Wei said.
The report predicts the United States, the eurozone and Japan are now expected to grow collectively by 1.5 per cent in 2014, before growth picks up to 2.1 per cent next year.
Following severe winter weather in the US in the first quarter, a value-added tax hike in Japan in the second quarter, and continuing weakness in the euro area, the worlds major industrial economies recorded virtually no growth in the first half of the year, it says.
The report says measures to stabilize investment helped China sustain its expansion.
China appears on track to meet ADO 2014 growth forecasts of 7.5 per cent in 2014 and 7.4 per cent in 2015.
Following first quarter growth of 7.4 per cent, steady consumption and improved external demand edged second quarter growth up to 7.5 per cent. Authorities deployed targeted monetary easing and a mini fiscal stimulus to keep growth from decelerating further from the 7.7 per cent recorded in 2013, while keeping credit growth in check, the report says.
It says India shows new promise of a turnaround.
After a decisive election victory, the report says the new government is well placed to pursue reforms to unlock the economys potential.
This update maintains the 5.5 per cent growth forecast for 2014 but raises by 0.3 percentage points to 6.3 per cent the forecast for 2015, when reforms can begin to bear fruit, the report says.
Stable growth for the region overall masks shifting fortunes across sub-regions, the report adds.
It says GDP growth in East Asia will remain at 6.7 per cent in 2014 and 2015 as moderating growth in China and Hong Kong and a slowdown in Mongolia are offset by export-driven upswings in South Korea and Taiwan.
The report says Southeast Asia will see stronger growth next year after a soft 2014 with a projected growth of 4.6 per cent this year, down from the 5.0 per cent forecast and compares with growth of 5.0 per cent in 2013.
Domestic demand has moderated in some of the bigger economies, with GDP forecasts trimmed for Indonesia, the Philippines, Singapore, Thailand, and Vieät Nam, the report says.
By contrast, the report says a rebound in exports from Malaysia has helped to propel considerably stronger economic growth there.
The report says South Asia is performing better than expected.
The sub- regional growth forecast for 2014 is raised slightly to 5.4 per cent, reflecting strengthening in Bangladesh and Pakistan on higher exports and remittances.
Growth in South Asia will pick up to 6.1 per cent in 2015, 0.3 percentage points higher than previously forecast.
In addition to the upward revision for India, the report says growth forecasts for Pakistan and Bangladesh edged up in 2015, but efforts to improve the climate for private investment are needed in both cases.
Forecasts for sub-regional inflation are trimmed by about a third of a percentage point to 6.1 per cent in 2014 and 5.9 per cent in 2015, it says.
Growth in Central Asia is hobbled by a slowdown in Russia.
Underperforming Outlook 2014 projections, the report says growth in the subregion is now projected to de- celerate to 5.6 per cent in 2014 as activity slows in Armenia, Kazakhstan, Kyrgyzstan, Turkmenistan and Uzbekistan.
The forecast for 2015 is lowered to 5.9 per cent on revisions for Armenia, Georgia, Kazakhstan, the Kyrgyzstan and Uzbekistan. These lower growth projections reflect a stagnant Russian Federation and a sharp industrial slowdown in Kazakhstan, it says.
The report says prospects in the Pacific have dimmed because of damage caused by torrential rains in Solomon Islands in early 2014, disappointing business activity in East Timor, and a downturn in construction and tourism in Palau.
Weakening food prices and stable oil prices keep inflation in check, the report says. Consumer prices in the region are forecast to rise by 3.4 per cent in 2014, the same pace as 2013, but pick up a bit to 3.7 per cent in 2015. Most governments have maintained their policy rates in line with the low inflation environment.