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Asia Fastest Growing Region
World Economy

Asia Fastest Growing Region

Developing Asia remains the fastest growing region globally despite slower-than-expected growth in major industrial countries as key economies in the region move ahead with structural reforms, says a new Asian Development Bank (ADB) report.
In an update of its flagship annual economic publication, Asia Development Outlook 2014, released Thursday, ADB kept its forecasts for growth of gross domestic product (GDP) for the region at 6.2% in 2014 and 6.4% in 2015. The region grew 6.1% in 2013. Developing Asia comprises the 45 ADB developing member countries.
“Slowing external demand has hurt some economies in the region but as a whole Asia and the Pacific is on track for firm growth in 2014 and 2015,” said ADB Chief Economist Shang-Jin Wei in launching the report. “Moving forward structural reform processes in the [People’s Republic of] China, India, and Indonesia — the region’s three biggest economies — will be critical in shaping the growth outlook.”

 Pursuing Growth
Targeted measures to stabilize investment helped the PRC sustain its expansion. Following first quarter growth of 7.4%, steady consumption and improved external demand edged second quarter growth up to 7.5%. Authorities deployed targeted monetary easing and a mini fiscal stimulus to keep growth from decelerating further from the 7.7% recorded in 2013, while keeping credit growth in check. The PRC appears on track to meet ADO 2014 growth forecasts of 7.5% in 2014 and 7.4% in 2015.
India shows new promise of a turnaround. After a decisive election victory, the new government is well placed to pursue reforms to unlock the economy’s potential. Reforms to stimulate investment, award timely environmental clearances, and control inflation are expected to build on rising exports to boost economic growth. This update maintains the 5.5% growth forecast for 2014 but raises by 0.3 percentage points to 6.3% the forecast for 2015, when reforms can begin to bear fruit.

 Shifting Fortunes
Stable growth for the region overall masks shifting fortunes across subregions:
* GDP growth in East Asia will remain at 6.7% in 2014 and 2015, as moderating growth in the PRC and Hong Kong, China — and a slowdown in Mongolia — are offset by export-driven upswings in the Republic of Korea and Taipei, China. GDP growth in Mongolia will fall sharply.
* South Asia is performing better than expected. The subregional growth forecast for 2014 is raised slightly to 5.4%, reflecting strengthening in Bangladesh and Pakistan on higher exports and remittances.
* Southeast Asia will see stronger growth next year after a surprisingly soft 2014. Growth this year is now projected at 4.6%, down from 5.0% forecast in ADO 2014 and actual growth of 5.0% in 2013. Domestic demand has moderated in some of the bigger economies, with GDP forecasts trimmed for Indonesia, the Philippines, Singapore, Thailand, and Viet Nam.
* Underperforming ADO 2014projections, growth in the subregion is now projected to decelerate to 5.6% in 2014 as activity slows in Armenia, Kazakhstan, the Kyrgyz Republic, Turkmenistan, and Uzbekistan. The forecast for 2015 is lowered to 5.9% .
* Prospects in the Pacific have dimmed because of damage caused by torrential rains in Solomon Islands in early 2014, disappointing business activity in Timor-Leste, and a downturn in construction and tourism in Palau.

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