THE Asian Development Bank (ADB) on Thursday upgraded slightly its forecast for economic growth in China this year, defying what has become a rather gloomy consensus among economists about prospects for growth in the world's second-largest economy.
China's gross domestic product is set to expand by 6.9 per cent in 2015, the ADB said in its latest Asian Development Outlook Update, upgrading an earlier forecast of 6.8 per cent and citing strong private consumption and services growth.
"The (Asia) region's growth is supported by vibrant private consumption in China and expanded industrial production in India and other countries," the ADB said.
Overall, Asia's developing economies "remain on track to post growth of 5.8 per cent in 2015 and 6.0 per cent in 2016, as the region's economies remain resilient to continued economic weakness in industrialised countries", according to the report.
"Although we have seen some softening in a number of economies, the broader regional outlook is for continued steady growth," said ADB chief economist Shang-Jin Wei, introducing the latest outlook.
In upgrading its forecast for China, the Manila-based ADB said that 7 per cent growth there in the first half of this year was followed by third-quarter growth at 6.9 per cent "which was stronger than expected" at the time of the last Asian Development Outlook in September.
"Despite a recent stock market correction (in China), private consumption continues to be the bright spot, with retail sales growing in nominal terms by 11.0 per cent in October. This reflects stronger sales of automobiles, food and beverages, and clothing."
At the same time, the ADB acknowledged that China's "investment growth remains weak, under a substantial housing overhang and persistent excess capacity in industry". "In the first 10 months of 2015, urban fixed asset investment expanded by 10.2 per cent year on year, down from 15.9 per cent in the same period last year.
"Central bank and government measures to stabilise the economy and to bolster small and medium-sized enterprises are providing some comfort, and in 2016 the economy should expand by 6.7 per cent, supported by further growth in consumption and services."
ADB growth prospects for South-east Asia meanwhile remained unchanged from the September update, with forecasts remaining at 4.4 per cent for 2015 and 4.9 per cent for 2016, the report said.
"A slight softening is seen for Indonesia, the largest economy in the sub-region, as a result of lower than expected budgetary disbursements and ongoing weakness in exports."
South Asia's outlook remains positive, the ADB said, with the sub-region on track to meet previous growth projections of 6.9 per cent in 2015 and 7 per cent in 2016.
"Continued strength in India is supported by growth in industrial production, public capital expenditure, and retail sales."
But, the report noted, "countries reliant on commodities are hurting from the global slump in prices, and the slower-than-expected recovery in the US and economic contraction in Japan will continue to weigh on export prospects".
The ADB forecasts for Asia come against a background of "lower combined growth outlook for the major industrial economies of the US, the euro area and Japan", the report added.