ADB sees sta­ble growth con­tin­u­ing in de­vel­op­ing Asia

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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 bank’s 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 re­gion’s 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 world’s 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 econ­omy’s 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.”—

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