ADB sees steady growth for developing Asia

ADB's flagship annual economic publication, Asian Development Outlook 2014 (ADO), released April 1, forecasts developing Asia will achieve gross domestic product (GDP) growth of 6.2% in 2014, and 6.4% in 2015. The region grew 6.1% in 2013, ABD's official website informs. Central Asia, meanwhile, should maintain its growth pace as its largest economy boosts public spending. Unexpectedly strong performance in Kazakhstan, which accounts for nearly half of subregional GDP, and sharp gains in Azerbaijan and the Kyrgyz Republic raised Central Asia's growth rate by nearly a percentage point to 6.5% in 2013. The subregion is forecast to maintain this rate through 2015, though tensions arising from events in Ukraine pose downside risk. Inflation in Central Asia is projected to accelerate sharply to 9.0% in 2014, reflecting currency devaluation in Kazakhstan, the Kyrgyz Republic, and Tajikistan, and higher growth in Georgia and Turkmenistan. "Developing Asia is successfully navigating a challenging global economic landscape and is well positioned to grow steadily over the next two years," said ADB President Takehiko Nakao. "Risks to the outlook have eased compared to the recent past, and policy makers in the region can manage them. At the same time, countries should continue to make every effort to pursue sound macroeconomic policies and needed structural reforms." Two broad trends shape the outlook. Demand for Asia's output is expected to grow as the recovery in the major industrial economies gains momentum. Combined GDP growth in the United States, the euro area, and Japan is expected to pick up to 1.9% in 2014 from 1.0% in 2013 before strengthening further to 2.2% in 2015. The improvement in demand will be offset somewhat by moderating growth in the PRC where the economy slowed to 7.7% in 2013 on impacts from tightened credit growth, pared industrial overcapacity, deepening local government debt, rising wages, currency appreciation, and the continuing shift in the government's development priorities away from quantity toward quality. These factors persist and PRC growth is forecast to slow to 7.5% in 2014 and 7.4% in 2015. While risks to the outlook have eased, three areas warrant close monitoring. First, if efforts in the PRC to curb credit expansion are too abrupt and excessively undermine growth, a deeper slowdown could drag down prospects for its trade partners. Second, data on the recovery in the major industrial economies have been mixed; pointing to the possibility that demand for the region's goods from these countries may be softer than envisaged. And third, a further shock to global financial markets from changes in US monetary policy cannot be ruled out. For full version go to