MANILA, 27th September, 2016 (WAM) – Developing Asia is expected to grow steadily despite external pressures and should meet earlier forecasts for 2016 and 2017, aided by resilience in the region’s two largest economies China and India, says a new Asian Development Bank (ADB) study.
In an update of its flagship annual economic publication, Asian Development Outlook (ADO) 2016, the Manila-based ADB kept its 2016 and 2017 gross domestic product (GDP) growth forecasts unchanged from its March estimates of 5.7 percent for each year.
“Strong growth in China and India is helping the region maintain its growth momentum,” said Juzhong Zhuang, Deputy Chief Economist. “Still, policymakers need to watch for downside risks including potential capital reversals that could be triggered by monetary policy changes in advanced economies, especially the US.”
A delayed recovery continues to hamper major industrial economies (the US, the euro area, and Japan) and the ADO Update has trimmed the earlier 2016 growth forecast to 1.4 percent, rising slightly to 1.8 percent in 2017.
Fiscal and monetary stimulus measures supported stronger-than-expected growth in China. The ADO Update raised the China’s growth forecasts by 0.1 percentage points in 2016 and 2017, to 6.6 percent and 6.4 percent respectively, which is helping to offset sluggishness elsewhere in East Asia. The subregion is now expected to grow 5.8 percent in 2016, and 5.6 percent in 2017.
South Asia, driven by the Indian economy, will retain its rapid pace of growth with GDP seen expanding 6.9 percent in 2016, and 7.3 percent the following year, unchanged from the March forecasts. India’s growth forecast for fiscal year 2016 is kept at 7.4 percent, supported by strong private consumption, while the milestone tax reform passed this year and progress in restructuring bank balance sheets should help revive investment and propel growth of 7.8 percent in 2017.
Southeast Asian economies will see growth edge up to 4.5 percent in 2016 on the back of robust government infrastructure investment, supported by strong performances from the Philippines and Thailand. In 2017, the subregion is expected to benefit from a pickup in demand from advanced economies and higher prices for export commodities.
Central Asian economies will remain under pressure from still depressed oil and gas prices, low external demand, and lower remittances. Growth for the subregion is now revised down to 1.5 percent for 2016, from 2.1 percent seen in March, reflecting the pessimistic outlook for energy exporters, Azerbaijan, Kazakhstan and Turkmenistan. In 2017, growth should pick up to 2.6 percent on expected stronger external demand and commodity prices.