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.


Saudi private sector rebounds with growth at 10-month high

Updated 04 December 2020

Saudi private sector rebounds with growth at 10-month high

  • Steep rise in sales and growing business confidence spark jump in purchasing, hiring activity

RIYADH: Business activity in Saudi Arabia has risen to its highest level since January this year, showing the Kingdom’s economy is beginning to overcome the worst effects of the coronavirus pandemic.

According to IHS Markit’s Purchasing Managers’ Index (PMI) Survey, the acceleration of output growth in the Saudi economy in November was driven by a steep rise in sales and strengthening business confidence.

The survey found that input purchasing rose, while employment growth also returned for the first time since January. Input cost inflation also quickened, leading to a stronger increase in average output charges.

The index has now registered above the 50.0 no-change mark for three months in a row, highlighting a sustained recovery after the economic downturn due to the pandemic.

The Saudi PMI rose to 54.7 in November from 51 the previous month — the strongest improvement since January. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared with the previous month, and below 50 an overall decrease.

Both domestic and foreign sales rose last month, marking only the second upturn in new export orders since February.

Business confidence for the year ahead also improved notably during the month. In particular, firms were encouraged by the Saudi government’s easing of lockdown curbs and news of a breakthrough in the development of a vaccine.

Accelerated rises in output and new orders led Saudi firms to sharply expand purchasing activity during November. In addition, hiring activity turned positive and a number of companies linked increased employment to rising demand.

Commenting on the latest survey, David Owen, an economist at IHS Markit, said: “A third successive rise in the Saudi Arabia PMI pointed to an economy getting back on its feet in November. Supported by output and new business growth reaching 10-month highs, the data suggests a strong end to the year for the non-oil private sector. Notably, employment started to rise, while business confidence strengthened in the wake of encouraging vaccine news and sharper demand growth.”

Saudi economist and financial analyst Talat Zaki Hafiz told Arab News: “The improvement is due to many factors, such as the reopening of the market with the ease in lockdown and, finally, the lifting of the curfew. The return to normality has had a significant impact on private sector performance.”

Hafiz added: “Things will get much better by the next year. We have also noticed an improvement in oil prices recently and this will improve things significantly.”