Business

Asian Development Bank Maintains Growth Forecast At 6% In Asia

ASHISH MEENA | 0
3840
| September 26 , 2018 , 15:47 IST

The Asian Development Bank (ADB) on Wednesday declared that it will maintain its forecast for the gross domestic product to grow at 6% for the year 2018 in Asia but the band also warned of the fallout of the ongoing trade tensions between China and the US for the region.

According to reports in media, ADB explained that Asia's GDP has remained stable because of strong domestic demand, especially in China and India, and high oil and gas prices, which benefitted energy-exporting countries such as Kazakhstan.

Speaking to media, ADB chief economist Yasuyuki Sawada said, "Growth in the region has held up to external challenges, helped by strong domestic demand in the People’s Republic of China and India. The biggest risk to continued growth comes from the disruption of international production linkages caused by a further escalation of trade tensions, but Asia’s growth should remain resilient to the direct effects of the trade measures taken to date".

The ADB also pointed risks to the region, such as if the US Federal Reserve needs to increase interest rates at a quicker pace than expected to hold off inflation.

ALSO READFollowing Indo-Pak Row, China Puts Restrictions On Drone Exports

The escalation in trade tensions will test the region's recovery, according to the ADB, which advised strengthening trade ties among countries.

The ADB lowered China's forecast growth to 6.3% in 2019 due to the risks of the trade war with the US and despite the monetary and fiscal measures taken by Beijing to help mitigate the impact.

Despite the progressive depreciation of the rupee, India's economy will maintain its upward trend this year with growth of 7.3 per cent and 7.6 per cent next year, owing to its demonetization measures and the introduction of a national tax on goods and services.

ADB warned of the slowdown in economic expansion in six of the 10 Southeast Asian countries, which together are forecast to grow 5.1 per cent this year and 5.2 per cent in 2019.

The high price of oil and gas, coupled with increased exports and investment, has boosted growth in central Asia, where the economy is expected to advance 4.1 per cent this year.

ADB president Takehiko Nakao on this added, "Fortunately, Asian policymakers have a variety of tools to maintain macroeconomic stability, ranging from conventional fiscal, monetary, and exchange rate policies to less conventional macroprudential policy and capital flow management".