The Asian Development Outlook - Summary of Highlights - 2016

Transcription

1. Summary of highlights of the Asian Development Outlook 2016 Update by ADB , 31 March 2016 Rescuing growth in uncertain times Slow going in a tough global environment Growth in developing Asia is forecast to dip slightly. Gross domestic product (GDP) in the region will expand by 5.7% in 2016 and 2017, decelerating from 5.9% in 2015 in a difficult and uncertain global environment. Solid growth in India and a pickup in aggregate growth in the Association of Southeast Asian Nations (ASEAN) will help balance continued growth moderation in the People’s Republic of China (PRC). Despite the slight dip, the region will contribute around 60% of global growth in the next 2 years, close to its contribution in the past 5 years. Growth in the industrial economies is unlikely to pick up this year. Aggregate growth in the major industrial economies—the United States (US), the euro area, and Japan—will stay at 1.8% in 2016 before inching up to 1.9% in 2017. In the US, expanding private consumption and investment will be tempered by weak external demand. While recovery in the euro area is gradually gaining ground, domestic and external risks abound, keeping growth from breaking out of its slow 2015 pace. Japan’s growth will improve slightly, helped by a pickup in private consumption this year in anticipation of a value-added tax increase next year. The PRC continues to shift away from its reliance on investment and exports. Growth slowed further last year as exports faltered, labor shortages began to bite, and the short-term adverse impact of supply-side reform took its toll. Reduced investment in industries with excess capacity will be another factor moderating growth still further to 6.5% (within the government’s target range of 6.5%–7.0%) and to 6.3% next year. Strong public investment boosted growth in India despite weak exports. Reform geared to attract more foreign direct investment progressed, and the authorities worked to repair corporate and bank balance sheets. While macroeconomic fundamentals are strong, progress on major structural reform is expected to be gradual. Growth momentum will be sustained at 7.4% in 2016 before picking up to 7.8% in 2017 with measures to fund stalled projects and an uptick in bank credit. Stronger growth is seen for ASEAN. Aggregate growth in the 10 ASEAN economies is forecast to accelerate steadily from 4.4% in 2015 to 4.5% in 2016 and 4.8% in 2017. Growth will be led by Indonesia as it ramps up investment in infrastructure and implements policy reform that spurs private investment. Solid consumption and investment will provide a lift to the Philippine economy. Thailand’s recovery is expected to gather momentum, and Viet Nam will sustain vigorous expansion. In contrast, Malaysian growth will slip further with low oil prices and weak external demand. Most Asian economies benefit from low international food and fuel prices. The large fall in oil and food prices tempered inflation. The regional rate eased from 3.0% in 2014 to 2.2% in 2015 as global oil prices fell by 47% and average food prices by 15%. Regional inflation will revive to 2.5% in 2016 as domestic demand strengthens and rise further to 2.7% in 2017 as global commodity prices recover.
2. Outlook by subregion Slowing growth is widespread across developing Asia . Weak recovery in the major industrial economies, moderating growth in the PRC, and recession in the Russian Federation are hampering growth in other economies with strong ties to them through trade, investment, and remittances. Meanwhile, sharply lower global commodity prices are undermining growth in the region’s oil producers, even as a presumed reciprocal boost to growth in oil importers remains elusive. Only Southeast Asia is forecast to see growth pick up in 2016, however modestly. The expected easing of these impediments to growth within the forecast horizon points to general improvement in 2017. Southeast Asia is seen reversing its growth slowdown in the next 2 years. Growth slowed in 7 of the 10 ASEAN economies, edging down the subregional average to 4.4% in 2015. In Indonesia, growth moderated for a fourth year in a row. In Malaysia, soft global demand and low oil prices cut growth by a full percentage point. Thailand’s recovery from a slump in 2014 was sluggish, while bad weather hurt agriculture in many economies. In contrast, foreign direct investment in manufacturing and robust construction propelled Viet Nam to its strongest expansion in 7 years. Aggregate growth is forecast to pick up to 4.5% in 2016 and 4.8% in 2017. Infrastructure investment is seen boosting growth in Indonesia, while Myanmar rebounds from devastating floods in 2015. Malaysia, on the other hand, faces another year of decelerating growth. Southeast Asia’s aggregate inflation rate eased to 2.7% in 2015 in line with lower food and fuel prices. Inflation is forecast to edge higher in most economies this year and next, but decelerating inflation in Indonesia will keep the ASEAN average to 2.6% in 2016 and 2.9% in 2017. East Asia will see growth drift lower as growth in the PRC moderates further. Subregional growth slowed to 6.0% in 2015—a 0.6 percentage point drop from the previous year—as all economies slowed. The rate is expected to decline further to 5.7% in 2016. In the PRC, efforts to rein in debt accumulation, adverse short-term effects from supply-side reform, and emerging labor shortages will tamp down growth from 6.9% in 2015 to 6.5% this year and 6.3% in 2017. The Republic of Korea will have stable growth this year, and Taipei, China will accelerate on higher government investment. Meanwhile, declines in mining output will push growth in Mongolia below 1%, and lower tourism flows will slow growth in Hong Kong, China. Although rising domestic demand and an improving global economy will lift growth rates slightly higher in 2017 across most of the subregion, continued moderation in the PRC will weigh down the subregional average to 5.6% in 2017. Inflation fell to 1.3% last year with lower prices for oil and other commodities but will rise moderately to 1.6% this year and 2.0% in 2017 as domestic demand rebounds and commodity prices recover. South Asia is forecast to post the most rapid growth in developing Asia. Growth in the subregion accelerated to 7.0% in 2015 and will accelerate further to 7.3% in 2017 after a hesitation at 6.9% this year. The subregion’s prospects reflect heavy weighting for India, where growth is expected to dip marginally to 7.4% in 2016 as exports decline and both public and private investment slows, and then pick up to 7.8% in 2017 as investment revives. Apart from weakness in export demand, other economies in the subregion face unique challenges to growth: a devastating earthquake and a political standoff in Nepal, a drop in high-end tourism in the Maldives, and much-needed fiscal reform to deal with a buildup of excessive debt in Sri Lanka. Both Bangladesh and Pakistan see continued moderate growth benefitting from sustained progress toward xvi Asian Development Outlook 2016 macroeconomic and structural reform. Subregional inflation fell to 5.0% in 2015, benefitting from low oil and commodity prices, but is projected to revive to 5.2% in 2016 and 5.7% in 2017.