ADB raises Asian growth

Pedestrians cross a street in the Central business district in Hong Kong on September 11, 2009. ADB said Asian governments needed to broaden their growth options by developing more intra-regional trade and reducing their risk to external shocks. -- PHOTO: AFP

Sep 22, 2009

HONG KONG - THE Asian Development Bank Tuesday raised its regional growth outlook for this year, with a huge dose of stimulus spending putting Asia on course to lead the world out of its economic slump.

But the Manila-based bank said that signs of recovery were not strong enough for Asian governments to remove the stimulus prop yet.

In an update to its annual outlook released in March, the ADB raised its 2009 forecast for Asia's gross domestic product (GDP) to 3.9 pe rcent growth from 3.4 per cent.

It also upgraded its 2010 estimate to 6.4 per cent from 6.0 per cent. 'Despite worsening conditions in the global economic environment, developing Asia is poised to lead the recovery from the worldwide slowdown,' said ADB chief economist Jong-Wha Lee.

'Firm action by many governments and central banks, the relatively healthy state of financial systems prior to the global crisis, and the rapid turnaround in the region's larger, less export-dependent economies, all enhanced developing Asia's growth prospects,' the report said.

But the ADB said Asian governments needed to broaden their growth options by developing more intra-regional trade and reducing their risk to external shocks.

Mr Lee added that economic activity in the larger developing Asian economies had rebounded and output looked set for a so-called V-shaped comeback. However, he cautioned: 'The improved regional outlook should not make developing Asian economies complacent.

'A protracted global slowdown or the hasty withdrawal of stimulus packages can degrade the region's ongoing recovery.' The report looked at prospects for countries stretching from the former Soviet states of Central Asia to some of the tiny Pacific islands, excluding developed countries such as Japan, Australia and New Zealand.

The ADB said it boosted China's GDP outlook by 1.2 percentage points to 8.2 per cent this year thanks to huge pump-priming in the world's third-biggest economy. Beijing has targeted growth of eight per cent to keep unemployment at bay and avoid social unrest. The ADB has forecast 8.9 per cent growth next year, up from 6.5 per cent projected in March.

It highlighted a US$585 billion (S$842 billion) government stimulus late last year, a massive surge in bank lending in the first half of this year and 'aggressive monetary easing'.

Export-dependent China announced its huge spending policy last year to boosting domestic consumption and infrastructure projects, as key overseas markets in the United States, Japan and the eurozone went into recession. The move led to a surge in imports, which in turn helped regional exporters. -- AFP