Asian growth steady despite weak global prospects, Brexit
View(s):MANILA – Growth in Asia and the Pacific’s developing economies for 2016 and 2017 will remain solid as firm performances from South Asia, East Asia and Southeast Asia help offset softness from the US economy, and near-term market shocks from the Brexit vote, according to a new Asian Development Bank (ADB) report released on Monday. In a supplement to its Asian Development Outlook 2016 (ADO 2016) report, released last March, ADB now forecasts 2016 growth for the developing economies at 5.6 per cent, below its previous projection of 5.7 per cent. For 2017, growth is seen unchanged at 5.7 per cent.
“Although the Brexit vote has affected developing Asia’s currency and stock markets, its impact on the real economy in the short term is expected to be small,” Shang-Jin Wei, ADB’s Chief Economist said in a media release. “However, in light of the tepid growth prospects in the major industrial economies, policy makers should remain vigilant and be prepared to respond to external shocks to ensure growth in the region remains robust.” Growth in 2016 and 2017, the report notes, is led by South Asia, and India in particular, which continues to expand strongly, while China is on track to meet earlier growth projections.
In East Asia, despite muted activity in Hong Kong, China and the Republic of Korea, growth forecasts are unchanged. To support its targets, the Chinese government is expected to continue using fiscal and monetary stimulus measures. South Asia, meanwhile is expected to be the fastest growing sub-region, led by India, whose economy has shrugged off global headwinds and is on track to meet ADB’s March fiscal year 2016 (year to March 2017) projected growth target supported by brisk consumer spending and an uptick in the rural economy. In Pakistan, further improvements in energy supply, higher infrastructure investments, and an improved security environment will help push up growth in 2016 and 2017 the report said, while the Bangladesh economy will remain robust on the strength of its garments sector.