Developing economies in Asia are holding steady and will grow at the earlier forecast rate of 5.7 percent this year and next, buoyed by resilience in the region’s two largest economies, China and India, the Asian Development Bank (ADB) said yesterday.
The region’s developing economies grew 5.9 percent last year and the bank is retaining its March forecasts, an ADB report said.
China’s economy — the second largest in the world — is forecast to grow by 6.6 percent this year and 6.4 percent next year, or 0.1 percentage point more than was forecast in March, due to strong fiscal and monetary stimulus to boost domestic demand while external demand remains tepid.
Private consumption and services generated most of the 6.7 percent growth in China in the first half of the year in line with the government’s objective of favoring sustainable growth supported by higher wages and more urban jobs, the report added.
Progress on reforms is helping India realize its growth targets, the report said, with earlier forecasts of 7.4 percent growth this year and 7.8 percent next year unchanged.
The India forecasts take into account a boost in private consumption after recent wage and pension increases, and expectations of a healthy monsoon lifting rural incomes.
A recovery in private investment would help drive growth to 7.8 percent next year, the report by the Manila-based lender said.
Growth in the five largest economies in Southeast Asia was forecast at 4.8 percent this year, the same as projected in March, with strong first-half performances in the Philippines and Thailand offset by a cut in forecasts for Indonesia, Malaysia and Vietnam.
Government investment in infrastructure, particularly in Indonesia, the Philippines and Thailand, has countered sluggish export demand and droughts that caused a drop in agricultural output in the first half of the year in all of the nations except Indonesia, the report said.
Growth in the five Southeast Asian economies is expected to accelerate to 5 percent this year due to firmer demand from major industrial economies, higher prices for exports and rising infrastructure investment, it said.
The report warned climate-related risks to developing Asia, such as shorter rainy seasons, more withering drought and worsened pest and disease outbreaks, if uncontrolled, might lead to economic losses equivalent to 10 percent of the region’s GDP in 2100.
The success of last year’s Paris agreement to limit the average rise in global mean temperature to below 2?C above preindustrial levels depends critically on developing Asia, it added.
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