Developing Asia’s Growth Steps Up To 6.6% in 2013
Hong Kong, China, 9 April 2013 – Rising private consumption and stronger intraregional trade will spur a pickup in
growth in developing Asia in 2013 and 2014, as economic activity in the US and Europe remains in the doldrums, the Asian
Development Bank (ADB) says in a major new report.
“The rebound in People’s Republic of China (PRC) and solid momentum in Southeast Asia are lifting the region’s pace
after the softer performance of 2012,” said ADB Chief Economist Changyong Rhee. “Domestic spending, in particular
consumption, is the main driver of the recovery, and is a welcome shift from the reliance on the markets of advanced
economies.”
ADB’s flagship annual economic publication, Asian Development Outlook 2013 (ADO 2013), released today, forecasts gross domestic product (GDP) growth in developing Asia of 6.6% in 2013 and 6.7% in 2014. In
2012, the region grew 6.1%.
The report warns that political risks linked to wrangling over the US debt ceiling, fatigue over tough austerity
measures in the eurozone, and long simmering tensions over border disputes in Asia present the main threats to the near
term outlook. It notes that the region’s favorable fiscal position cannot be taken for granted, with improved revenue
efficiency, better governance, and other longer-term structural issues needing to be addressed.
The report projects stronger economic activity to spur renewed price pressures, with inflation seen moving up from 3.7%
in 2012 to 4.0% in 2013 and 4.2% in 2014. These pressures remain manageable for now, but will need to be monitored
closely, especially as strong capital inflows raise the specter of potential asset market bubbles.
Across the subregions, East Asia will set the pace with the highest projected growth of 7.1% in 2013 and the same in
2014. The PRC—the world’s second largest economy—is forecast to expand 8.2% in 2013 on the back of rising domestic
demand and improved exports, with spillover benefits for neighboring economies. Growth will edge back slightly to 8.0%
in 2014 as the government moves to cool pressure on the environment and to address income inequality.
South Asia will see a turnaround after two years of economic softening, with growth estimated at 5.7% in 2013 and 6.2%
in 2014. India will lead the upturn, with projected growth of 6.0% and 6.5%, but the world’s second most populous
country is still struggling to realize its full potential, with structural and policy issues inhibiting investment.
Southeast Asia was the only subregion to see growth accelerate year-on-year in 2012, led by a recovery in Thailand and
strong public spending in the Philippines. This buoyancy is set to continue on the back of robust consumption, rising
investment and increased intraregional trade, with GDP growth projected at 5.4% in 2013 and 5.7% in 2014. The impending
startup of the ASEAN Economic Community in 2015 will enlarge trade volumes within this bloc of dynamic economies,
helping to diversify export markets, the report says.
Higher public spending, particularly in Kazakhstan and Azerbaijan, will boost Central Asia, with projected growth of
5.5% in 2013 and 6.0% in 2014. The completion of some major public construction projects, including a large liquefied
natural gas pipeline in Papua New Guinea (PNG), will see growth in the Pacific cool slightly to 5.2% in 2013. Growth in
the Pacific is expected to bounce back to 5.5% in 2014 as exports commence from the PNG pipeline and elsewhere in the
subregion new public construction activity gets under way, including post-cyclone reconstruction work. A promising
pickup in tourist numbers should also benefit some smaller Pacific economies.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth,
environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members – 48 from
the region. In 2012, ADB assistance totaled $21.6 billion, including cofinancing of $8.3 billion.
ENDS