MANILA, PHILIPPINES: Asia’s developing economies remain on track to post growth of 5.8% in 2015 and 6.0% in 2016, as the region’s economies remain resilient to continued economic weakness in industrialized countries, says a new Asia Development Bank (ADB) report.
In a supplement to the September 2015 Asian Development Outlook Update report, ADB maintained growth projections for the region, with a slight upgrade of growth forecasts for the People’s Republic of China (PRC) offset by downward revisions to the forecasts for Central Asia and the Pacific. The growth outlook for the major industrial economies has also been downgraded.
“Although we have seen some softening in a number of economies, the broader regional outlook is for continued steady growth,” said ADB Chief Economist Shang-Jin Wei. “The region’s growth is supported by vibrant private consumption in the PRC and expanded industrial production in India and other countries. At the same time, countries reliant on commodities are hurting from the global slump in prices, and the slower-than-expected recovery in the US and economic contraction in Japan will continue to weigh on export prospects.”
East Asia’s growth forecast is maintained at 6.0% for 2015 and 2016. The PRC will expand 6.9% this year, slightly more than the 6.8% previously projected. Despite an ongoing housing overhang and excess industrial capacity, the PRC’s economy has remained resilient, supported primarily by private consumption and services. Central bank and government measures to stabilize the economy and to bolster small and medium-sized enterprises are also providing some comfort, and in 2016 the economy should expand 6.7%, supported by further growth in consumption and services.
South Asia’s outlook remains positive, with the subregion on track to meet previous growth projections of 6.9% in 2015 and 7.3% in 2016. Continued strength in India is supported by growth in industrial production, public capital expenditure, and retail sales. This is helping to offset slowdowns seen for Bhutan, the Maldives, and Nepal. Growth prospects for Southeast Asia also remain unchanged from ADB’s September Update, with forecasts at 4.4% for 2015 and 4.9% for 2016. A slight softening is seen for Indonesia, the largest economy in the subregion, as a result of lower-than-expected budgetary disbursements and ongoing weakness in exports.
The growth outlook for Central Asia has been downgraded in both 2015 and 2016 to 3.2% and 3.7% from 3.3% and 4.2%, respectively, as continued low commodity prices, particularly oil and gas, and the slow recovery in the Russian Federation remain a drag on economic performance. Energy importers such as Armenia, Georgia, the Kyrgyz Republic, Tajikistan, and Uzbekistan are seeing a slowdown in domestic consumption as a result of lower remittances, particularly from the Russian Federation.
Pacific economies are also seen posting growth below ADB’s September update estimates, with delays in several large investment projects undermining growth prospects for Timor-Leste, and weak commodity prices causing revenue shortfalls for Papua New Guinea, which is weighing on the government’s public spending plans. For 2015, growth for the subregion is now seen at 6.3% from 6.7% in the September Update, and at 3.8% in 2016 from 3.9% previously.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members-48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.