Manila:Led by India, South Asia continues to be the fastest growing subregion despite rising tensions between the United States and its trading partners, says a new Asian Development Bank (ADB) report.
“Growth in Asia and the Pacific’s developing economies for 2018 and 2019 will remain solid as growth continues apace across the region,” it said.
In a supplement to its Asian Development Outlook (ADO) 2018 report released last April, ADB forecasts 2018 growth for Asia and the Pacific at 6.0% for 2018 and 5.9% for 2019, in line with its previous projections. Excluding Asia’s newly industrialized economies, growth is forecast at 6.5% in 2018 and 6.4% in 2019, also unchanged from April.
“South Asia, meanwhile, continues to be the fastest growing subregion, led by India, whose economy is on track to meet fiscal year 2018 projected growth of 7.3% and further accelerating to 7.6% in 2019, as measures taken to strengthen the banking system and tax reform boost investment,” report said.
In both Pakistan and Bangladesh, agriculture recorded notable improvement over the last year, surpassing expectations and driving growth, it added.
“Although rising trade tensions remain a concern for the region, protectionist trade measures implemented so far in 2018 have not significantly dented buoyant trade flows to and from developing Asia,” said ADB Chief Economist Yasuyuki Sawada.
“Prudent macroeconomic and fiscal policymaking will help economies across the region prepare to respond to external shocks, ensuring that growth in the region remains robust,” Sawada added.
As the government’s efforts to rebalance growth toward domestic consumption remain on track, the world’s second largest economy, the People’s Republic of China, is projected to meet previous forecasts of 6.6% in 2018 and 6.4% in 2019.
Growth forecast remains unchanged for Southeast and East Asia while Central Asia is growing faster than expected, promted an upward revision to forecasts from 4.0% to 4.2% in 2018 and 4.2% to 4.3% in 2019.
In the Pacific, growth is expected at 2.2% and 3.0% over the next 2 years as the region’s largest economy, Papua New Guinea, continues to slow due to the impact of the February earthquakes on production and exports of liquefied natural gas and other export commodities.
The report now projects lower inflation for developing Asia at 2.8% for 2018 and 2.7% for 2019. Domestic factors, including central bank intervention to avoid sharp currency depreciations, and the reintroduction of food and fuel subsidies to contain the effects of rising commodity prices in some economies, helped contain inflationary pressures.