Developing Asia remains the fastest growing region globally despite slower than expected growth in major industrial countries as key economies in the region make progress on structural reforms, according to a new Asian Development Bank (ADB) report.
Growth in developing Asia, which comprises the 45 ADB developing member countries, is forecast at 6.2 per cent this year and 6.4 per cent next year, after expanding 6.1 per cent in 2013, according to an update of the bank's Asian Development Outlook.
“Slowing external demand has hurt some economies in the region but as a whole Asia and the Pacific is on track for firm growth in 2014 and 2015,” said the bank’s chief economist Shang-Jin Wei, who was appointed in August.
"Moving forward structural reform processes in China, India and Indonesia – the region's three biggest economies – will be critical in shaping the growth outlook."
The world's major industrial lands recorded practically no growth in the first six months of the year, as they were hit by bad winter weather in the United States in the first quarter, a value-added tax hike in Japan in the second quarter, and continuing weakness in the euro area.
They are now forecast to expand by 1.5 per cent collectively this year, before growth picks up to 2.1 per cent next year.
Targeted measures to stabilise investment helped China to sustain growth.
Following first quarter growth of 7.4 per cent, steady consumption and improved external demand edged second quarter growth up to 7.5 per cent, the bank said.
Authorities deployed targeted monetary easing and a mini fiscal stimulus to keep growth from decelerating further from the 7.7 per cent recorded in 2013, while keeping credit growth in check, and is on track to meet growth forecasts of 7.5 per cent in 2014 and 7.4 per cent in 2015.
India’s new government is also well placed to pursue reforms to free up growth momentum. The bank expects 5.5 per cent growth this year and has raised its forecast for 2015 by 0.3 percentage points to 6.3 per cent, when reforms can begin to bear fruit.
