HONG KONG: Developing Asian countries will grow steadily over the next two years, with higher demand from recovering advanced economies offset by slowing growth in China, according to a new report.
Asian Development Outlook 2014 (ADO), from the Asian Development Bank (ADB), predicted that the region's economy would move ahead at 6.2% in 2014 and 6.4% in 2015, slightly faster than the 6.1% recorded in 2013.
While broadly optimistic in the short-term, ADB President Takehiko Nakao sounded a note of caution. "Risks to the outlook have eased compared to the recent past, and policy makers in the region can manage them," he said. "At the same time, countries should continue to make every effort to pursue sound macroeconomic policies and needed structural reforms."
In China, the region's largest economy, the ADB said that slowing investment growth and active implementation of structural reforms would push growth slightly lower over the next two years – at 7.5% in 2014 and 7.4% in 2015 compared to the 7.7% achieved in both 2013 and 2012.
It expected that more equitable income growth and higher social spending would sustain expanding consumption, but warned on the need for the central bank to find the right balance between subduing credit growth and supporting economic growth.
India's performance was expected to pick up, from 4.9% in 2013 to 5.5% in 2014 and 6.0% in 2015, but the Bank said it was still operating below its potential and called for reforms to remove impediments to investment needs to find the right balance between subduing credit growth and supporting economic growth.
Across Southeast Asia growth was likely to be determined by country factors, with, for example, Indonesia benefiting from a fall in inflation while Thailand could rebound if political disruption receded.
The Philippines projected growth of 6.4% in 2014 and 6.7% in 2015 would be helped by the expansion of the business process outsourcing sector and a doubling of tourist numbers.
Data sourced from ADB; additional content by Warc staff