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MANILA, PHILIPPINES – Economic growth in developing Asia remains broadly stable, but a slight slowdown in India has trimmed the region's growth outlook for 2016, says a new Asian Development Bank (ADB) report. more…

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by December 22, 2016 General

MANILA, PHILIPPINES – Economic growth in developing Asia remains broadly stable, but a slight slowdown in India has trimmed the region’s growth outlook for 2016, says a new Asian Development Bank (ADB) report.

In a supplement to its Asian Development Outlook 2016 Update report, ADB has downgraded 2016 growth to 5.6 per cent, below its previous projection of 5.7 per cent. For 2017, growth remains unchanged at 5.7 per cent.

“Asian economies continue their robust expansion in the face of global economic uncertainties,” said ADB deputy chief economist Juzhong Zhuang.

“Structural reforms to boost productivity, improve investment climate, and support domestic demand can help maintain growth momentum into the future.”

Combined growth for the major industrial economies exceeded expectations in the Update, ticking up 0.1 percentage point to 1.5 per cent in 2016.

Growth in 2017 is maintained at 1.8 per cent.

Robust consumer spending supported the US economy, with supportive monetary policy and improved labour markets fuelling growth in the euro area.

Japan’s expansion, meanwhile, will be buoyed by strong exports, despite the stronger local currency.

ADB has downgraded the forecast in South Asia from 6.9 per cent to 6.6 per cent in 2016.

Growth will bounce back in 2017, reaching 7.3 per cent.

India’s tempered growth projection to 7.0 per cent from the previously forecasted 7.4 per cent in 2016 is because of weak investments, a slowdown in the country’s agriculture sector, and the lack of available cash because of the government’s decision to ban high-denomination banknotes.

This will likely affect largely cash-based sectors in the country including small and medium-scale businesses.

The effects of the transition are expected to be short-lived and the Indian economy is expected to grow at 7.8 per cent in 2017.

The forecast in East Asia is maintained for 2016 and 2017.

Growth this year will reach 5.8 per cent, with a slight moderation to 5.6 per cent in 2017.

Growth in the People’s Republic of China (PRC) — the world’s second largest economy — is expected to hit 6.6 per cent this year, driven by strong domestic consumption, solid wage growth, urban job creation, and public infrastructure investment.

The forecast for the PRC in 2017 is maintained at 6.4 per cent.

In Southeast Asia, growth forecasts remain unchanged at 4.5 per cent in 2016 and 4.6 per cent in 2017, with Malaysia and the Philippines expecting stronger growth because of a surge in domestic consumption and public and private investment, compared with lower growth forecasts in Brunei Darussalam, Myanmar, and Singapore.

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