September 28, 2016 12:50 AM NPT
KATHMANDU, Sept 28: Developing Asia is expected to grow steadily despite external pressures and should meet earlier forecasts for 2016 and 2017, aided by resilience in the region's two largest economies -- the People's Republic of China and India, according to a new study of Asian Development Bank (ADB).
In an update of its flagship annual economic publication, Asian Development Outlook (ADO) 2016, ADB kept its 2016 and 2017 gross domestic product (GDP) growth forecasts unchanged from its March estimates of 5.7 percent for each year.
"Strong growth in the PRC and India is helping the region maintain its growth momentum,” Juzhong Zhuang, Deputy Chief Economist of the ADB, said. "Still, policymakers need to watch for downside risks including potential capital reversals that could be triggered by monetary policy changes in advanced economies, especially the US."
A delayed recovery continues to hamper major industrial economies -- like the US, the euro area, and Japan -- and the ADO Update has trimmed the earlier 2016 growth forecast to 1.4 percent, rising slightly to 1.8 percent in 2017, according to a statement issued by the Manila-based multilateral donor.
Fiscal and monetary stimulus measures supported stronger-than-expected growth in the PRC. The ADO Update also raised the PRC's growth forecasts by 0.1 percentage points in 2016 and 2017, to 6.6 percent and 6.4 percent respectively, which is helping to offset sluggishness elsewhere in East Asia, the statement added.
The sub-region is now expected to grow 5.8 percent in 2016, and 5.6 percent in 2017.
"South Asia, driven by the Indian economy, will retain its rapid pace of growth with GDP seen expanding 6.9 percent in 2016, and 7.3 percent the following year, unchanged from the March forecasts. India's growth forecast for fiscal year 2016 is kept at 7.4 percent, supported by strong private consumption, while the milestone tax reform passed this year and progress in restructuring bank balance sheets should help revive investment and propel growth of 7.8 percent in 2017," it adds.
The ADO Update also notes that risks to the region's outlook remain tilted to the downside, with the external environment still fragile and the possibility of a US Federal Reserve Rate hike leaving open the potential for disruptive capital flows that could complicate macroeconomic policy management in the region.
Asia could benefit from low-carbon emmision
Developing Asia stands to gain far more than it will need to pay to shift to a low-carbon growth, the Asian Development Bank (ADB) report reads.
Keeping global temperature increases below 2 degrees Celsius, as agreed at the 2015 Paris climate summit, will require developing Asia to spend an additional net $300 billion per year on clean-energy infrastructure alone through 2050.
The finding is set forth in a special theme chapter, "Meeting the Low-Carbon Growth Challenge" in an update to its flagship annual economic publication, Asian Development Outlook 2016.
"This is a substantial sum, but the economic returns from adopting low-carbon policies needed to mitigate the increasingly devastating impacts of climate change, far outweigh the costs," said Juzhong Zhuang, Deputy Chief Economist of the ADB.