ADB keeps developing Asia growth forecast at 6 percent

TOKYO, Sept 26 (KUNA) -- Growth remains stable across most of developing Asia, thanks to robust domestic demand, buoyant oil and gas prices, and a consolidation of India's growth rebound, the Asian Development Bank (ADB) said Wednesday.
In an update of its Asian Development Outlook 2018, the Manila-based lender maintained its July forecast of 6.0 percent growth this year, but trimmed next year's projection to 5.8 percent from 5.9 percent for Asia's 45 developing economies, which exclude Japan and other industrialized countries. "Growth in the region has held up to external challenges, helped by strong domestic demand in China and India," said ADB Chief Economist Yasuyuki Sawada, according to ADB's press release.
However, the ADB warned that escalating trade tensions will test the region's resilience, underscoring the importance of efforts to bolster trade ties among its countries.
"The biggest risk to continued growth comes from the disruption of international production linkages caused by a further escalation of trade tensions, but Asia's growth should remain resilient to the direct effects of the trade measures taken to date," said Sawada.
The bank kept its growth forecast for China at 6.6 percent this year but revised down its gross domestic product (GDP) growth for 2019 to 6.3 percent, slower than its 6.4 percent forecast in July, reflecting lower demand growth and the risk of escalating trade tensions. "Supply-side reform amid monetary and fiscal support will nevertheless ensure that growth remains on track," it added. The ADB maintained its GDP growth estimates for India at of 7.3 percent for fiscal 2018 and 7.6 percent for fiscal 2019, saying the temporary effects of the demonetization of large banknotes and the introduction of the national goods and services tax abate as expected.
"The impact of rising oil prices is offset by robust domestic demand and rising exports, particularly of manufactures. Depreciation of the rupee and volatile external financial markets pose challenges, as does accelerating inflation though tighter fiscal policy will help quell inflationary pressures," the bank said in the annual report. The report also said risks to the region include financial shocks if the US Federal Reserve needs to raise interest rates faster than currently expected to stave off inflation. "But the biggest risk is the impact of worsening trade conflict on cross-border production networks as business ties are severed and investment plans cancelled," the bank added.
The ADB is a multilateral development finance institution dedicated to reducing poverty in Asia and the Pacific. Established in 1966, it has now owned by 67 members, mostly from the region, as well as the US, Britain and Germany. In 2017, ADB assistance totaled USD 32.2 billion, including USD 11.9 billion in cofinancing. (end) mk.tg