'Developing Asian economies continue to perform well'
Manila, Philippines: Developing Asia remains on track towards steady
growth in 2014 despite slower-than-expected growth in the United States
(US) in the first quarter, said a new Asian Development Bank (ADB)
report. The Asian Development Bank Outlook ADO Supplement released
today, maintains ADB's April forecast of 6.2% growth in 2014 and 6.4% in
2015 for the region's 45 developing economies. "Developing Asia as a
region continues to perform well," said ADB Deputy Chief Economist
Juzhong Zhuang.
"The pace of growth moderation in the People's Republic of China (PRC)
is in line with our expectations while the stage is set for India to
pursue reform that could unlock its growth potential," he said.
The major industrial economies are anticipated to expand by 1.5% this
year, a downward revision from the 1.9% forecast in April's ADO 2014.
Softer US growth has been somewhat offset by Japan's robust first
quarter performance while the euro area has generally met expectations.
In East Asia, quarterly growth in the PRC met ADB expectations with
steady consumer demand, targeted government measures to stabilise
investment, and a pickup in external demand in the second quarter of
2014. Retail sales and industrial production have been picking up pace.
The PRC is on track to meet ADO 2014 forecasts of 7.5% growth in 2014
and 7.4% in 2015.
Improving prospects in India have buoyed South Asia's growth outlook
somewhat. The new government - the first to hold a single-party majority
in the lower house since 1984 - outlined a 10-point plan to revive the
Indian economy prioritising infrastructure and investment reforms,
faster resolution of inter-ministerial issues, efficient policy
execution and policy stability.
While details on the structural reforms remains limited, it is
expected that greater political certainty will support a pickup in
infrastructure investment. ADB maintains its growth forecast at 5.5% for
fiscal year (FY) 2014 but upgrades its FY2015 forecast by 0.3 percentage
points to 6.3% as anticipated reform bears fruit.
Pakistan's growth for the fiscal year that ended in June surprised on
the high side - 4.1% compared to the ADO 2014 forecast of 3.4% - and
Nepal's growth was seeing a strong finish to its fiscal year. Overall,
South Asia's 2014 forecast nudged up 0.1 percentage points to 5.4%.
The improved outlook in India pushes up the sub-regional forecast for
2015 from 5.8% to 6.1%.
The outlook for Southeast Asia has softened as growth prospects
falter in Indonesia, Thailand, and Vietnam. In Indonesia, first quarter
2014 growth slowed to 5.2% as soft external demand, low commodity prices
and the temporary ban on select mineral exports undermined the recovery
of net exports.
Thailand's economy contracted by 0.6% in the first quarter as the
political deadlock affected domestic demand and tourism. Vietnam's
growth forecast has been slightly adjusted to account for the effect of
tensions with the PRC on economic activities including recent factory
riots.
The 2014 forecast for the sub-region has been downgraded by 0.3
percentage points to 4.7%. As the factors slowing growth in 2014 are
expected to be temporary, the forecast growth of 5.4% in 2015 has been
maintained.
Growth in Central Asia is gradually moderating, with many economies
affected by the deteriorating outlook of the Russian Federation.
Revised projections reflect weaker-than-expected performances in
Kazakhstan, Kyrgyz Republic, and Uzbekistan so far in 2014. Aggregate
growth projections for the region are revised down to 6.3% in 2014 and
further to 6.1% in 2015, from 6.5% forecast for both years in ADO 2014.
A devastating tropical storm in Solomon Islands and
weaker-than-expected indicators for Palau and Timor-Leste are holding
back growth in the Pacific. Overall, Pacific GDP is expected to grow
5.2% in 2014, a 0.2 percentage point decline from the ADO 2014 forecast.
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