|
ADB UPGRADES FORECAST
In a special assessment note
issued on July 20, the Asian
Development Bank has
upgraded its forecast for
developing Asia, as recent macroeconomic
indicators suggest that
the 2010 growth outlook for the
region is stronger than anticipated
in the Asian Development Outlook
(ADO) 2010 released in April.
Gross domestic product in the
region is now projected to grow
7.9 per cent, up from the 7.5 per
cent originally forecast. Betterthan-
expected results in the first
quarter-driven by buoyant
exports, strong private demand,
and sustained stimulus policy
effects-are behind the revision.
Nevertheless, ADB warns about
downside risks in the second half
of the year including uncertain
global environment, unpredictable
private domestic
demand, and the risks of dramatic
capital flows and exchange rate
fluctuations. As such, the growth
outlook for 2011 is kept
unchanged at 7.3 per cent.
Developing Asia comprises 45
member-countries of ADB and
covers Central Asia, East Asia,
South Asia, Southeast Asia and
the Pacific.
In East Asia, the newly industrialised
economies of Hong Kong,
China; and Republic of Korea are
expected to post stronger growth
due to impressive first quarter performances.
Improved investment
has helped support the recovery.
Industrial production and consumer
spending started picking
up in the first half of the year, with
exports recovering significantly.
GDP growth for 2010 (%) |
| Sub-region/Economy |
ADO 2010 |
Revised to |
| Emerging East Asia |
7.7 |
8.1 |
| East Asia |
8.3 |
8.4 |
| China |
9.6 |
9.6 |
| Southeast Asia |
5.1 |
6.7 |
| ASEAN-5 |
5.1 |
6.8 |
| South Asia |
7.4 |
7.5 |
| India |
8.2 |
8.2 |
| Central Asia |
4.7 |
4.8 |
| The Pacific |
3.7 |
3.8 |
| Developing Asia |
7.5 |
7.9 |
While the economy in China
grew 11.1 per cent in the first half
of 2010, the GDP growth forecast
for the year has been maintained
at 9.6 per cent. Recent measures to
slow credit growth and cool speculation
in the property market will
likely lead to slower investment in
the coming quarters. Fixed-asset
investment growth slowed to 25.5
per cent in the second quarter, the
lowest rate of expansion since the
stimulus package was announced
in 2008. Industrial output figures
and the purchasing managers'
index also suggest a soft landing.
First quarter growth in the
ASEAN-5 economies (Indonesia,
Malaysia, Philippines, Singapore
and Thailand) also exceeded
expectations, fuelled by strong
exports, robust industrial production,
and improved consumer
confidence. Singapore is set for a
solid 2010 after growing 18.1 per
cent in the first half. The tradedriven
economy's growth projection
has been upgraded sharply to
12.5 per cent from the 6.3 per cent
forecast in April, amid robust
demand for its manufactured
exports, particularly biomedical
products and semiconductors.
In the Philippines, electionrelated
government spending
helped propel growth to a strong
7.3 per cent in the first quarter.
While this is unlikely to be sustained
through the year, growth in
2010 has still been upgraded to 5
per cent (from 3.8 per cent).
Indonesia, Malaysia and Thailand
are also expected to outperform
the ADO 2010 forecasts.
Malaysian growth is now expected
at 6.8 per cent in 2010, from 5.3
per cent, supported by robust private
consumption and investment
and recovery in exports due to the
stronger global economic expansion.
Thailand is forecast to grow
5.5 per cent (from about 4 per cent
originally) on healthy exports and
an expected recovery in tourism
toward the end of the year.
Indonesia's economy, driven by
strong domestic demand, is now
projected to expand 6 per cent,
revised up from 5.5 per cent.
Forecasts for the rest of the Southeast
Asian economies should meet
previous expectations.
In South Asia, economic indicators
remain broadly within expectations.
GDP growth in India
reached 8.6 per cent (year-onyear)
in the first quarter, which is
consistent with the current forecast
of 8.2 per cent for the year.
In Sri Lanka, post-conflict
reconstruction is pushing up
demand such that first quarter
growth reached 7.1 per cent,
suggesting growth for the year
may be more rapid than the ADO
2010 estimate. Industrial production
and exports are increasing
in both economies. Asset
price build-up in Bangladesh
has boosted domestic demand,
with preliminary government
estimates showing the economy
expanded 6 per cent in fiscal
2010 (ending June 2010).
In Central Asia, overall,
growth prospects are in line with
ADO 2010 forecasts. But improving
global conditions and higher
oil prices have boosted
economies. Remittances from the
Russian Federation to the region
increased 14.2 per cent year-onyear
on average for the first quarter
of 2010. Higher oil prices are
likely to contribute to current
account surpluses in the oil
exporting countries. Georgia's
manufacturing, transportation,
and trade sectors grew much
faster than anticipated in the first
quarter. In contrast, the economic
situation in the Kyrgyz Republic
remains unsettled and its
growth prospects muted due to
recent civil unrest.
The Pacific island economies
also remain on track to meet
2010 growth projections,
helped by better prospects for
the global economy.
|