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Highlights of ADB report on developing Asia's economic outlook
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11:01, September 22, 2009

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The Asian Development Bank Tuesday published the update to its flagship economic publication Asian Development Outlook (ADO) 2009. The followings are the highlights of the report:

-- The economic expansion of developing Asia to come in at 3.9 percent, revised up by 0.5 percentage points from the March forecast of 3.4 percent, on the back of much stronger growth in East Asia and South Asia. The growth projection for 2010 is likewise upgraded to 6.4 percent from 6.0 percent.

-- Coming off last year's peak, inflation in developing Asia is forecast to come in at just 1.5 percent in 2009, down from the March projection of 2.4 percent. More robust growth is likely to push prices up faster in 2010, raising the forecast to 3.4 percent. Central bankers in the region will therefore want to put a tight watch on monetary policies so as not to encourage asset bubbles that would inflate prices to levels that are no longer justified by fundamentals.

-- Slower growth in industrial countries has resulted in a weak recovery in developing Asia's exports. But imports were even more sluggish as demand for intermediate goods waned. Overall, the region's current account is expected to register a surplus of 5.0percent of GDP in 2009. With developing Asian economies increasingly relying on domestic demand to boost growth, their current account surplus is projected to fall further to 4.3 percent of GDP in 2010.

-- Economic expansion in East Asia is now projected to reach 4.4 percent in 2009, supported by stronger growth in China and a shallower contraction in South Korea. China's massive fiscal stimulus package announced last year and the aggressive monetary easing in 2009 bolstered economic growth. The economy is now projected to expand by 8.2 percent in 2009. Similarly, South Korea's fiscal stimulus has been effective, and the economy is forecast to shrink by just 2.0 percent this year, compared with March's 3.0percent forecast.

-- Prospects for growth this year in South Asia have improved to 5.6 percent, up from the March forecast of 4.8 percent, with five of the eight sub-regional economies doing better than expected. India's economic expansion, in particular, has been upgraded by 1 percentage point to 6 percent due to the expected positive effects of a continued large fiscal stimulus announced in its July 2009 budget and the emerging signs of recovery in private business confidence.

-- Aggregate growth in the 10 Southeast Asian economies is now expected to slow to 0.1 percent in 2009 compared with the March growth forecast of 0.7 percent. Positive prospects for Indonesia and Vietnam failed to counterbalance the deterioration among the more open, as well as the smaller, economies in the sub-region. Next year, overall growth is put at 4.3 percent.

-- Across Central Asia, projections for economic growth are now much bleaker than in March due to lower commodity prices; a deeper downturn in the Russian Federation (the sub-region's main trade and financial partner); and weaker capital inflows, investments, and remittances. Sub-regional growth is forecast to slow to 0.5 percent in 2009 and 3.6 percent in 2010, compared with 3.9 percent and 4.8 percent projected in March. The largest Central Asian economy, Kazakhstan, is seen contracting by 1 percent in 2009, as it grapples with the fallout from a banking crisis and lower oil prices.

-- Economic growth in the Pacific in 2009 is slightly downgraded to 2.8 percent from 3.0 percent expected in March, largely as a result of a less optimistic growth forecast for the Democratic Republic of Timor-Leste (the sub-region's third-largest economy). Only three of the 14 sub-regional economies are likely to expand by more than 1.0 percent this year. Weaker prospects stem from falling incomes from tourism and remittances brought by the global slowdown.


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