GDP in Asia to growStaff writer ▼ | April 9, 2013
"The rebound in People's Republic of China (PRC) and solid momentum in Southeast Asia are lifting the region's pace after the softer performance of 2012. Domestic spending, in particular consumption, is the main driver of the recovery, and is a welcome shift from the reliance on the markets of advanced economies," said ADB Chief Economist Changyong Rhee.
ADB's flagship annual economic publication, Asian Development Outlook 2013 (ADO 2013), forecasts gross domestic product (GDP) growth in developing Asia of 6.6% in 2013 and 6.7% in 2014. In 2012, the region grew 6.1%.
The report warns that political risks linked to wrangling over the US debt ceiling, fatigue over tough austerity measures in the eurozone, and long simmering tensions over border disputes in Asia present the main threats to the near term outlook. It notes that the region's favorable fiscal position cannot be taken for granted, with improved revenue efficiency, better governance, and other longer-term structural issues needing to be addressed.
The report projects stronger economic activity to spur renewed price pressures, with inflation seen moving up from 3.7% in 2012 to 4.0% in 2013 and 4.2% in 2014. These pressures remain manageable for now, but will need to be monitored closely, especially as strong capital inflows raise the specter of potential asset market bubbles.
East Asia will set the pace with the highest projected growth of 7.1% in 2013 and the same in 2014. China is forecast to expand 8.2% in 2013 on the back of rising domestic demand and improved exports, with spillover benefits for neighboring economies.
South Asia will see a turnaround after two years of economic softening, with growth estimated at 5.7% in 2013 and 6.2% in 2014. India will lead the upturn, with projected growth of 6.0% and 6.5%.
Southeast Asia was the only subregion to see growth accelerate year-on-year in 2012, led by a recovery in Thailand and strong public spending in the Philippines, with GDP growth projected at 5.4% in 2013 and 5.7% in 2014.
Higher public spending, particularly in Kazakhstan and Azerbaijan, will boost Central Asia, with projected growth of 5.5% in 2013 and 6.0% in 2014.
AsiaGrowth in the Pacific is expected to bounce back to 5.5% in 2014 as exports commence from the PNG pipeline and elsewhere in the subregion new public construction activity gets under way, including post-cyclone reconstruction work. A promising pickup in tourist numbers should also benefit some smaller Pacific economies. ■