ADB upgrades growth forecast in developing Asia to 6.5%

December 13, 2017

The Asian Development Bank (ADB) forecasts that economic expansion in developing Asia will accelerate to 6 percent in 2017 as stronger than expected exports and domestic consumption fuel growth.

Excluding Asia’s newly industrialized economies, growth is now expected at 6.5 percent this year, according to a new ADB report.

In a supplement to its Asian Development Outlook Update 2017 report, ADB upgrades its 2017 growth domestic product (GDP) outlook in the region by 0.1 percentage points compared to its September 2017 forecast, while its 2018 forecast remains unchanged at 5.8 percent.

An unexpectedly strong expansion in Central, East, and Southeast Asia has offset a downward adjustment in South Asia.

“Developing Asia’s growth momentum, supported by recovering exports, demonstrates that openness to trade remains an essential component of inclusive economic development,” said Yasuyuki Sawada, ADB’s chief economist. “Countries can further take advantage of the global recovery by investing in human capital and physical infrastructure that will help sustain growth over the long-term.”

Combined growth for the major industrial economies is revised upward to 2.2 percent for 2017 and 2 percent for 2018, due to robust domestic demand in the euro area, and in Japan due to private investment and net exports. Growth projections for the United States remain unchanged at 2.2 percent in 2017 and 2.4 percent in 2018.

By subregion, growth for East Asia is revised upward to 6.2 percent in 2017, from 6 percent, while 2018 projections of 5.8 percent are unchanged. Growth prospects in the People’s Republic of China (PRC)—the world’s second largest economy—are revised up on resilient consumption. Growth in the PRC is now expected to expand by 6.8 percent in 2017 and 6.4 percebt in 2018.

South Asia will remain the fastest growing of all subregions in Asia and the Pacific, despite a downward revision from previous projections from 6.7 percent to 6.5 percent in 2017, and is expected to pick up to 7 percent in 2018.

Growth for Southeast Asia is picking up faster than earlier forecast with GDP set to expand by 5.2 percent in 2017 and 2018, compared to September 2017 forecasts of 5 percent and 5.1 percent.

The subregion is benefiting from stronger investments and exports, with accelerating growth for Brunei Darussalam, Malaysia, the Philippines, Singapore, and Thailand. Infrastructure investment continued to play an important role in Indonesia, the Philippines, and Thailand. Robust domestic demand—particularly private consumption and investment—will continue to support growth in the subregion, according to the report.

Meanwhile, rising commodity prices have not yet driven inflation across the region, with consumer price inflation tame and stable. Price inflation is unchanged from previous projections of 2.4 percent in 2017 and 2.9 percent in 2018. DMS