To lead global economic recovery:
Asia to register stronger growth
Developing Asia is expected to register a stronger-than-expected 3.9
percent growth this year as timely economic policies and programs
implemented by Asian Governments will keep the region afloat amid the
global recession.
The Asian Development Bank has forecast in March that the region will
only expand by 3.4 percent as most of its export driven economies are
expected to be crippled by falling demand. But on Tuesday, the
Manila-based lender revised its forecast to a higher 3.9 percent. ADB
also upgraded its growth forecast for 2010 to 6.4 percent from 6 percent
forecast in March.
In its flagship annual economic publication, Asian Development
Outlook 2009, the Manila-based bank said the regional Governments'
"quick and decisive response" to the global downturn softened its impact
to developing Asian economies. Massive stimulus packages, tax
cuts,monetary easing policies and social assistance encouraged
consumption and investments.
"Almost every large economy in developing Asia has implemented
measures to stimulate aggregate demand through fiscal and monetary
expansion. In turn, households were relatively quick to spend fiscal
windfalls that came in the form of tax cuts and income support, giving a
fillip to consumption that began to boost GDP by the second quarter of
2009," ADB said in its report issued on Tuesday.
More than keeping the region's economies resilient, these measures
will also help in supporting its recovery. The ADB said the region is
poised to achieved a V-shaped rebound, and will in fact lead the
recovery from the global slowdown. "Despite worsening conditions in the
global economic environment,developing Asia is poised to lead the
recovery from the worldwide slowdown," ADB Chief Economist Jong-Wha Lee
said in a statement.
India and China the world's fastest growing economies and developing
Asia's largest economies will lead developing Asia's rebound.
Economic growth in East Asia is upgraded to 4.4 percent as China is
seen to grow by 8.2 percent, beating the previous forecast of 7 percent.
ADB forecasts the South Asian economies to grow by 5.6 percent from the
previous 4.8 percent as the Indian economy is poised to expand by 6
percent. Both the Chinese and Indian Governments launched huge stimulus
packages and reduced key policy rates. This prevented the global
recession from wiping out their recent economic gains.
The ADB said higher bank lending and fixed asset investments - which
pushed the Chinese economy to expand by 7.1 percent in the first half
will continue support developing Asia's largest economy and offset the
decline in net exports.
The ADB expects that in 2010, China will grow by 8.9 percent thanks
to increased infrastructure investment, construction and domestic
consumption.
The Indian economy is expected to grow by 6 percent this year and 7
percent for 2010. India's public expenditure-led growth strategy, while
appropriate, also presents risks. The ADB said a huge fiscal deficit
isn't sustainable and the domestic food price inflation may create a
dilemma for monetary management in 2009 as the Reserve Bank, of India
seeks to keep inflation expectations in check.
Growth prospects in other developing Asian countries are less
sanguine. The once dynamic Southeast Asian is forecast to slow to 0.1
percent this year. ADB expects global trade to remain weak this year,
dragging down the export-reliant Thai, Malaysian and Singaporean
economies.
Falling remittances, investments and tourism receipts are also
hurting the economies of Central Asia (which will slow to 0.5 percent)
and Pacific islands (which will grow at a slower 2.8 percent).
Developing Asia's recovery will also be affected by the global
economic performance. The ADB expects the global economy to remain weak,
with the economies of industrialized countries U.S., Western Europe and
Japan contracting 3.7 percent in 2009.
ADB Assistant Chief Economist Joseph Ernest Zveglich Jr. said that
the region alone can't be the main driver of its own growth as most
economies rely on exports to industrialized economies to support its
growth.
"The region relies too much on external demand," Zveglich said. To
develop more resilient economies, the ADB proposed developing Asia
should broaden the scope and structure of its openness. Asian economies
should help boost domestic demand, encourage labour mobility and promote
intraregional trade to promote a more sustainable growth.
Developing Asian economies should also strengthen its domestic
financial markets and support the establishment of regional capital
markets for the efficient use of regional savings. "Combined with a
stronger domestic economy, broader openness can help regional economies
achieve rapid yet stable growth," Lee said.
Xinhua
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