THE DEVELOPING economies of Asia will maintain strong growth in 2015 and 2016, supported by low commodity prices and a recovery in the major industrial economies, the Asian Development Bank (ADB) said.
“Steady growth in developing Asia continues by 6.3 percent in 2015 and 2016. Growth [will be]underpinned by domestic reform, advanced economies’ recovery, and commodity price reductions,” Akiko Terada-Hagiwara, ADB senior economist, said.
The forecast was part of the Asian Development Outlook 2015, released on Tuesday.
Asia providing 60% of global growth
From the trough of the global financial crisis in 2009, developing Asia has contributed 2.3 percentage points to global GDP growth—nearly 60 percent of the world’s annual 4.0 percent pace, the ADB report pointed out. Eight economies in the region posted growth exceeding 7.0 percent in nearly every year of the post-crisis period, including China, Laos, and Sri Lanka.
Growth in the US, where recovery seems to have turned a corner, is leading major industrial economies. While signs are mixed in the euro area and Japan, soft oil prices and accommodative monetary policy will support growth. As a group, these economies are forecast to expand by 2.2 percent in 2015, up 0.6 percentage points from 2014, and 2.4 percent in 2016.
Offsetting China weakness
With improving external demand for the region’s outputs, an expected pickup in India and in most members of the Association of Southeast Asian Nations (Asean), could help balance gradual deceleration in China, the region’s largest economy, the bank said.
Growth slowed in China in 2014 on weak fixed asset investment, particularly in real estate. As the government proceeds with its structural reform agenda, further slowing of investment is expected to diminish growth to 7.2 percent in 2015 and 7.0 percent in 2016.
India is forecast to overtake China in terms of growth as the initial phase of government efforts to remove structural bottlenecks is lifting investor confidence. With the support of stronger external demand, India is set to expand by 7.8 percent in 2015, a sharp rise from 7.4 percent growth in 2014. This momentum is expected to build to 8.2 percent growth in 2016, aided by expected easing of monetary policy and a pickup in capital expenditure.
SE Asia growth to rebound
The Southeast Asia region, which includes the Philippines, is poised for a growth rebound in 2015 after subregional growth fell to 4.4 percent in 2014. The Asian Development Outlook forecast sees aggregate growth rebounding to 4.9 percent in 2015 and 5.3 percent in 2016 as recoveries in Indonesia and Thailand lead the way, and with most of the subregion expected to benefit from rising exports and lower inflation.