MANILA, Philippines (AP) — Developing economies in Asia are holding steady and will grow at the earlier forecast rate of 5.7 percent this year and next, buoyed by resilience in the region's two largest economies, China and India, the Asian Development Bank said Tuesday.
The region's developing economies grew 5.9 percent in 2015, and the bank was retaining its March forecasts, an ADB report said.
China's economy — the second largest in the world — is forecast to grow by 6.6 percent in 2016 and 6.4 percent in 2017, or 0.1 percentage point more than was forecast in March, due to strong fiscal and monetary stimulus to boost domestic demand while external demand remains tepid.
Private consumption and services generated most of the 6.7 percent growth in China in the first half of the year in line with the government's objective of favoring sustainable growth supported by higher wages and more urban jobs, the report added.
Steady progress on reforms is helping India realize its growth targets, the report said, with earlier forecasts of 7.4 percent growth in 2016 and 7.8 percent in 2017 unchanged.
The India forecasts take into account a boost in private consumption after recent wage and pension increases and expectations of a healthy monsoon lifting rural incomes. A recovery in private investment will help drive growth to 7.8 percent in 2017, the report by the Manila-based lender said.
Growth in the five largest economies in Southeast Asia was forecast at 4.8 percent in 2016, the same as projected in March, with strong first-half performances in the Philippines and Thailand offset by a cut in forecasts for Indonesia, Malaysia and Vietnam.
Government investment in infrastructure, particularly in Indonesia, the Philippines and Thailand, has countered sluggish export demand and droughts that caused a drop in agriculture output in the first half of the year in all of the countries except Indonesia, the report said.
Growth in the five Southeast Asian economies is expected to accelerate to 5.0 percent in 2017 on account of firmer demand from major industrial economies, higher prices for exports, and rising infrastructure investment, it said.
The report warned climate-related risks to developing Asia like shorter rainy seasons, more withering drought and worsened pest and disease outbreaks, if uncontrolled, may lead to economic loss equivalent to 10 percent of the region's gross domestic product in 2100.
The success of the 2015 Paris Agreement to limit the average rise in global mean temperature to below 2 degrees Celsius above pre-industrial levels depends critically on developing Asia, it added. It said emissions from the region have risen rapidly from 25 percent of global total in 1990-1999 to 40 percent in 2012.