An improving growth outlook in Japan and the United States paired with stronger-than-expected performance in the People’s Republic of China (PRC) support a steady growth outlook for developing Asia, says a new Asian Development Bank (ADB) report.
The Asian Development Outlook Supplement, released today, forecasts growth of 6.0% in 2013 for ADB’s 45 developing member countries, improving to 6.2% in 2014. The forecasts are unchanged from the Asian Development Outlook Update issued in October.
“Despite uncertainties in the global economic environment, developing Asian economies remain resilient. The region has performed well in 2013 and is now poised to benefit from the further signs of growth momentum in the advanced economies,” said ADB Chief Economist Changyong Rhee.
Advanced economies of the US, euro area and Japan are on track to meet the October forecast of 0.9% growth in 2013. ADB expects 1.9% growth in these economies in 2014, up 0.1 percentage points from the October forecast.
The outlook for PRC growth is increased by 0.1 percentage points to 7.7% in 2013 and 7.5% in 2014 on the back of rising infrastructure investment. This boosts the average East Asian forecast by the same magnitude to 6.7% for both 2013 and 2014 as indicators in other economies in the subregion are generally in line with October assumptions.
South Asia is on track to meet growth expectations of 4.7% in 2013 and 5.5% in 2014. After bottoming out in the first fiscal quarter, India’s economy appears to have recovered on the back of a rebound in exports and higher industrial and agricultural outputs. India is anticipated to grow at 4.7% in fiscal year 2013 (ending 31 March 2014) and 5.7% in fiscal year 2014, unchanged from the October forecast.
A slight moderation is forecast in Southeast Asia. The subregion is expected to post growth of 4.8% in 2013 and 5.2% in 2014; both forecasts are revised down 0.1 percentage points from October. The moderation stems from the impact of tensions in Thailand on consumption and tourism. The devastating impact of Typhoon Haiyan is tempering the Philippines’ 2013 growth, but reconstruction is expected to boost growth as it ramps up in 2014.
Growth in Central Asia is gradually recovering, with aggregate projections for the subregion revised up from October forecasts: to 5.7% from 5.4% for 2013 and to 6.1% from 6.0% for 2014. The revisions reflect stronger performance in Kazakhstan and Turkmenistan.
Pacific economies are expected to slow from 7.1% growth in 2012 to 5.0% in 2013 before bouncing back to 5.4% in 2014. The projections are 0.2 percentage points lower than in October for 2013 and 0.1 percentage points lower for 2014 as weak international commodity prices are adversely affecting agriculture, mineral, and forestry export earnings of some of the larger Pacific economies such as Papua New Guinea and Solomon Islands.
Expected average inflation in developing Asia remains as forecast in October: 3.6% in 2013 and 3.7% in 2014.