Cheap oil can benefit Asia - ADB Report
Manila, Philippines: The growth outlook for developing Asia remains
steady, even though momentum slowed in the second half of 2014, but the
declining oil prices represent a golden opportunity for many beneficial
reforms, the Asian Development Bank (ADB) said in a new report.
In a supplement to its Asian Development Outlook 2014 Update, ADB
forecasts gross domestic product (GDP) growth for the region of 6.1% in
2014, down from 6.2% expected in September, and 6.2% in 2015, down from
Developing Asia, comprising the 45 ADB developing member countries,
grew 6.1% in 2013. Growth projections for Central Asia, East Asia and
Southeast Asia have been revised downward. There is no change for South
The Pacific region's growth outlook has been adjusted upward.
"While growth in the first three quarters of this year were somewhat
softer than we had expected," said ADB Chief Economist Shang-Jin Wei.
"Declining oil prices may mean an upside surprise in 2015 as most
economies are oil importers," he said.
Recovery in the major industrial economies of the United States (US),
euro area, and Japan has been revised down slightly since the update, as
weak third quarter performance in Japan overshadows unexpected strength
in the US.
GDP growth in the advanced economies is now forecast to average 1.4%
in 2014, down from 1.5% forecast in the Update, before picking up to
2.1% in 2015.
The growth moderation in the People's Republic of China (PRC) was
seen extending into the fourth quarter due to a continued real estate
market correction and its spillover to the related sectors such as
The PRC growth forecast has been revised downward to 7.4% in 2014
from 7.5% in the update, and to 7.2% from 7.4% for 2015.
India is on track to reach the update growth forecast of 5.5% in
FY2014 (ending 31 March 2015) after expanding by 5.7% in the first
quarter and 5.3% in the second quarter.
By eliminating diesel fuel subsidies, the government has demonstrated
its willingness to tackle contentious reforms, but it must extend its
efforts to reach the forecast 6.3% growth in FY2015.
Somewhat stronger-than-expected performance in the Maldives and Sri
Lanka in 2014 has been balanced by softness in Afghanistan and Bhutan.
Strong domestic demand, supported by healthy remittance inflows, may
lead to an upside surprise in Bangladesh in fiscal year (FY) 2015
(ending June 30, 2015).
Growth in several large Southeast Asian economies has been softer
than anticipated in the first nine months of 2014, with slight
reductions to the projections for Indonesia, Philippines, Singapore and
GDP in the sub-region is expected to expand by 4.4% in 2014, down
from 4.6% forecast in the update, and 5.1% in 2015, down from 5.3%.
The slowdown in the Russian Federation is weighing on growth in
Kazakhstan and other Central Asian economies. Reduced remittance flows
and muted external demand are undermining growth in Armenia, the Kyrgyz
Republic and Uzbekistan.
The aggregate growth projections for Central Asia are revised down to
5.1% from 5.6% for 2014 and to 5.4% from 5.9% for 2015. The Pacific
economies are expected to accelerate to 13.4% growth in 2015, led by a
burst of output in Papua New Guinea as it enters its first full year of
liquefied natural gas exports.
The sub-region is forecast to grow 5.4% in 2014, modestly higher than
expected in the update as prospects have improved in some economies
including Fiji, Solomon Islands and Palau.
With oil and commodity prices falling, most developing Asian
economies have revised their inflation forecasts downward.
The forecast for the region has been lowered to 3.2% in 2014 and 3.5%
in 2015, from the update's 3.4% and 3.7%.