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ADB maintains upbeat outlook on Asia's economic prospects
THE flow of optimistic projections on Asia's short-term economic outlook continued on Thursday as the Asian Development Bank (ADB) upgraded its growth forecast for the region from 5.7 per cent to 5.9 per cent in 2017 and from 5.7 per cent to 5.8 per cent for 2018. This follows recent upgrades by the World Bank and others.
Growth projections have been raised for China, the world's second-largest economy as well as for India, while "high first-quarter growth in Malaysia, the Philippines and Singapore keeps South-east Asia on track to meet growth forecasts of 4.8 per cent this year and 5 per cent in 2018", the ADB said in its latest Asian Development Outlook supplement.
In Singapore's case, the ADB said that "despite external risks to the outlook, manufacturing and domestic services are expected to remain robust for the rest of the year, supporting upgrades in GDP growth forecasts to 2.4 per cent for 2017 and 2.5 per cent for 2018".
Singapore's economy, the report noted, "grew by 2.5 per cent in the first half of 2017. Robust growth in manufacturing, at 8.2 per cent, was driven primarily by the electronics and precision engineering cluster, which expanded on higher global demand for semiconductors and equipment to manufacture them".
The Republic's services sector "grew by 1.6 per cent in the first half of 2017 supported by transportation and storage, business services as well as information and communications. Construction declined by 5.9 per cent with continued weakness in private construction".
Malaysia's economy meanwhile "beat expectations in the first quarter of 2017 as it grew by 5.6 per cent, the highest rate in two years, supported by sharp expansion in domestic demand", the ADB noted.
Growth in Malaysia's exports this year "is expected to remain firm, supported by a weaker currency and improvements in global trade".
The ADB revised up the growth forecast for Malaysia in 2017 to 4.7 per cent from a previous forecast of 4.4 per cent, while leaving unchanged the growth forecast for 2018.
"Developing Asia is off to a good start this year with improved exports pushing growth prospects for the rest of 2017," said ADB's chief economist Yasuyuki Sawada at the launch of the report.
"Despite lingering uncertainties surrounding the strength of the global recovery, we feel that the region's economies are well-placed to face potential shocks to the outlook," he added.
Combined growth for the world's major industrialised economies is forecast to remain at 1.9 per cent in 2017 and 2018, the ADB said.
"Improved forecasts for the eurozone and Japan, due to robust domestic demand, have offset the slight growth downturn in the US to 2.2 per cent from the previously projected 2.4 per cent as a result of disappointing first-quarter results in 2017."
Growth for East Asia has been revised up to 6 per cent in 2017 and 5.7 per cent in 2018 from the original projections of 5.8 per cent and 5.6 per cent respectively.
"After recent growth moderation, an increase in net exports and domestic consumption has improved growth prospects in China, which is now expected to expand by 6.7 per cent in 2017 and 6.4 per cent in 2018.
South Asia will remain the "fastest growing of all subregions in Asia and the Pacific, with growth on track to meet original projections of 7 per cent in 2017 and 7.2 per cent in 2018", according to the report. India - the subregion's largest economy - is expected to achieve previous growth projections of 7.4 per cent in 2017 and 7.6 per cent in 2018, primarily due to robust consumption.
Consumer price inflation in the Asia region "is projected to be lower than the previous estimate on the back of steady international oil and food prices due to sufficient supplies and favourable weather conditions despite increasing demand", the report said.