ADB raises growth estimate for developing Asia to 6% this year, but warns of trade risks

The Asian Development Bank expects China’s economy to grow 6.6 percent this year, faster than the bank’s prior estimate of 6.4 percent made in December. (Reuters)
Updated 11 April 2018

ADB raises growth estimate for developing Asia to 6% this year, but warns of trade risks

MANILA: The Asian Development Bank raised its 2018 economic growth estimate for developing Asia to 6.0 percent from 5.8 percent, citing solid export demand, but said US protectionist measures and any retaliation against them could undermine trade.
Growth in developing Asia would only ease slightly to 5.9 percent in 2019, the bank said in its 2018 Asian Development Outlook released on Wednesday.
Strong external and domestic demand helped economies in the region expand by an average 6.1 percent last year.
While protectionist trade measures by the US so far this year have yet to dent trade flows to and from Asia, the risks are there, the Manila-based institution said.
“Further actions and retaliation against them could undermine the business and consumer optimism that underlies the regional outlook,” the ADB said.
China has blamed the US for trade frictions amid escalating threats of tariffs on billions of dollars’ worth of goods between the world’s two biggest economies, sparked by US frustration with China’s trade and intellectual property policies.
Another risk to Asia’s growth, the ADB said, is “diminishing capital inflows if the US Federal Reserve needs to raise interest rates faster than markets expect.” The Fed last raised rates in March and policymakers signaled two or three more hikes this year.
The ADB now expects China’s economy to grow 6.6 percent this year, faster than the bank’s prior estimate of 6.4 percent made in December, and by 6.4 percent in 2019.
China has set a growth target of around 6.5 percent this year, the same as last year, which it handily beat with an expansion of 6.9 percent.
China’s growth will moderate “as economic policy leans further toward financial stability and a more sustainable growth trajectory,” ADB said.
By region, South Asia will remain the fastest growing in Asia Pacific, with the ADB pegging expansion this year at 7.0 percent and 7.2 percent in 2019.
Despite growth easing to 6.6 percent in 2017, India’s economy is projected to bounce back to 7.3 percent in 2018 and to 7.6 percent in 2019 as the country’s new tax regime improves productivity, the ADB said.
Banking reform and corporate deleveraging are also taking hold, which could reverse a downtrend in investment, the bank said.
Growth in Southeast Asia is forecast at 5.2 percent for this year and next, the same pace as 2017, while Central Asia is projected to slow to 4 percent in 2018 before picking up to 4.2 percent next year.


China aims for sustained and healthy economic development

Updated 30 October 2020

China aims for sustained and healthy economic development

  • Beijing to let market forces play decisive role in resources allocation, report says

BEIJING: China is targeting sustained and healthy economic development in the five years to 2025, with an emphasis on a higher quality of growth, the Xinhua news agency said on Thursday, citing the ruling Communist Party’s Central Committee.

President Xi Jinping and members of the Central Committee, the largest of the ruling party’s elite decision-making bodies, met behind closed doors from Monday to lay out the 14th five-year plan, a blueprint for economic and social development.

China’s external environment “is getting more complicated,” the agency said, adding, “There is a significant increase in instabilities and uncertainties.”

BACKGROUND

China aims to boost its gross domestic product (GDP) per person to the level of moderately developed countries by 2035, while GDP is due to top 100 trillion yuan ($15 trillion) in 2020.

However, the country’s development was still in a period of important strategic opportunities, despite new challenges, it said.

It added that China aims to boost its gross domestic product (GDP) per person to the level of moderately developed countries by 2035, while GDP is due to top 100 trillion yuan ($15 trillion) in 2020.

China will also deepen reforms and let market forces play a decisive role in resources allocation, the agency said.

China will promote a “dual circulation” model, make self-sufficiency in technology a strategic pillar for development, move to develop and urbanize regions, and combine efforts to expand domestic demand with supply-side reforms, it added.

The “dual circulation” strategy, first proposed by Xi in May, envisages that China’s next phase of development will depend mainly on “domestic circulation” or an internal cycle of production, distribution and consumption, backed by domestic technological innovation.