ADB raises growth prospects for Asia to 5.9% in 2017
The Chinese economy, the report says, is expected to grow 6 percent, two-tenths more than estimated in the bank’s first prospects report in April.
“Growth prospects for developing Asia are looking up, bolstered by a revival in world trade and strong momentum in the People’s Republic of China,” said ADB Chief Economist, Yasuyuki Sawada, in the report.
China would lower its growth next year to 6.4 percent, two-tenths more than the estimation five months ago, the report added.
The dollar value of exports in the region has grown by 11 percent in the first five months of 2017 with respect to the same period in 2016, and that of imports by 17 percent following two years of contraction in sales due to falling prices of raw materials and reduced demand.
Sawada said the Chinese economy remains strong and will continue to drive global growth following a 6.9 percent rise in the first half of 2017, two tenths more than in 2016, mainly due to good domestic consumption figures and a recovery in exports.
According to ADB, consumption will be the main driver of the Chinese economy as revenues and consumer confidence increase.
The Manila-based bank underlined that China’s financial and monetary policies will remain unchanged, although the yuan’s liberalization may translate into an increase in China’s currency swing band.
It also stressed risks in the Chinese economy will continue, as the necessary regulations in the financial system to control the rise in debt may cause liquidity problems and add pressure to weaker financial institutions.
The ADB report also reduced the growth prospects for India, another major regional player, from 7.4 to 7 percent in 2017 and from 7.6 to 7.4 percent in 2018, owing to controversial measures like demonetization in 2016 or a change in the tax regime of products and services that reduced consumer spending and investment in business.
For Southeast Asia, ADB improved its growth forecast from 4.8 to 5 percent in 2017 and from 5 to 5.1 percent in 2018, driven mainly by increased exports from Malaysia and Singapore.
The report also warned that high levels of debt may pose a risk to financial stability of the entire region and emphasized that state economic policies must strengthen their positions in the finance sector.
The increase in fuel prices, according to Sawada, is also providing tax relief to oil-exporting countries, but the fact that the rises are not drastic helps at the same time not to destabilize nations that are importers in the region.
Asia needs to mobilize $1.7 trillion annually to improve its infrastructure, not only in traditional transport and energy projects, but also in education and sanitation, Sawada added. ■