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ADB raises Asia growth forecast to 8.2%

ROSY NUMBERS, LURKING RISKThe forecast for Taiwan was increased to 7.7 percent, while Singapore’s economy is predicted to surge 14 percent, ADB said


The Asian Development Bank (ADB) raised its forecast for the region’s economic growth this year, crediting a rapid recovery in exports even as it warned the risk of another recession in advanced countries has not completely receded.

The Manila-based development bank said yesterday it now expects developing Asia to grow 8.2 percent this year, compared with a projection of 7.5 percent growth issued in April. The forecast, which doesn’t include Japan, covers 44 ­developing and newly industrialized nations in Asia.

“Overall, developing Asia’s recovery seems to have taken firm hold,” the ADB said. Increased consumer and business spending as a result of government stimulus also played its part in the recovery from the financial crisis, it said.

In predictions for individual economies, the bank maintained its forecast of 9.6 percent growth for China, the world’s second-biggest economy. Taiwan was raised to 7.7 percent. Hong Kong was revised upward to 5.8 percent and South Korea was raised to 6 ­percent.

India’s anticipated growth edged up from 8.2 percent to 8.5 percent, although the bank warned about high inflation in the south Asian nation because of scant monsoon rains last year that suppressed harvests.

The Philippine economy was expected to jump 6.2 percent — up from an earlier prediction of 3.8 percent. Singapore is forecast to surge 14 percent — more than double the previous figure of 6.3 percent.

Thailand’s outlook improved from 4 percent growth to 7 percent. The bank projected a 4.1 percent expansion for Pakistan this year, slowing to 2.5 percent next year because of the country’s recent flooding.

However, the bank warned about possible weakness in the US, Europe and Japan, highlighting sluggishness in the US housing market and the risk of sovereign debt defaults in Europe.

“The global recovery remains shaky, and downside risks lurk. The possibility of a double-dip recession in the major industrial economies has not receded completely,” the report said.

In China, the ADB said economic growth would taper off in the ­second half after GDP ­expanded 11.1 percent in the first half as Beijing phases out expansionary fiscal and monetary policies. Export growth is also expected to slow because of weaker demand from some export markets.

The gradual appreciation of the Chinese yuan against the US dollar — 1.5 percent from the start of the year to the middle of this month — won’t have a major impact on trade in the short term, the bank said.

ADB said Asia’s developing economies should make long-term growth their top priority, as the latest forecast remained below the region’s record 9.6 percent expansion in 2007, while ­developing economies still lag far behind industrial economies in per capita ­income and the region remains home to two-thirds of the world’s poor, ADB chief economist Jong-wha Lee told a press briefing in Hong Kong yesterday.

Officials would also have to focus on efforts to “broaden and deepen” their financial markets and tighten regulatory enforcement, Lee said.

The region’s shifting economies now reflect a “middle-income, capital-abundant Asia,” signaling the need to rejig policies that worked when the region was “low income and capital scarce,” the report said.

“It’s time to improve Asia’s long-term productive capacity,” Lee said.

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