The Asian Development Bank (ADB) has trimmed growth projection for the region’s developing economies in 2016, amid disappointing growth in the US and short-term impact from the Brexit vote.
Gross domestic product in Asia and the Pacific is now projected to expand 5.6 per cent for the year, down from an initial forecast of 5.7 per cent in March, the Manila-based bank said Monday.
For 2017, the growth projection is unchanged at 5.7 per cent, it said.
“Although the Brexit vote has affected developing Asia’s currency and stock markets, its impact on the real economy in the short term is expected to be small,” ADB chief economist Shang Jin Wei said.
“However, in light of the tepid growth prospects in the major industrial economies, policy makers should remain vigilant and be prepared to respond to external shocks to ensure growth in the region remains robust,” he said.
Growth will be led by South Asia, particularly India, which is expected to grow 7.4 per cent in 2016 and 7.8 per cent in 2017, the bank said in a supplemental report to its annual Asian Development Outlook released in March.
China is on track to meet forecast growth of 6.5 per cent in 2016 and 6.3 per cent in 2017, the report added.
The report projects higher inflation for developing Asia to come in at 2.8 per cent for 2016 and 3 per cent for 2017 – both up 0.3-percentage points from the previous forecasts.
“The rise is due largely to a recovery in oil and food prices,” the bank said, noting that oil prices rebounded from lows earlier in the year and food prices rose nearly 9 per cent in June for the fifth consecutive month.
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