(EnergyAsia, September 30 2016, Friday) — Asia’s developing economies remain on course for another two years of strong growth despite the headwinds of tough global conditions, predicts the Asian Development Bank (ADB).
In its latest survey of the region, the bank said it expects the 45 developing economies to grow by a collective 5.7% in 2016 and 2017, down slightly from last year’s 5.9%. The survey covered some of the region’s smallest economies like the Cook Islands, Fiji, Kiribati and the Marshall Islands to giants like China, India and South Korea.
China’s nearly US$11-trillion economy, the world’s second largest, is expected to grow by 6.6% in 2016 and 6.4% in 2017, down from last year’s 6.9%. With export growth weakening and external demand for its products slowing, China will rely on a combination of strong fiscal measures and monetary stimulus to keep its economy expanding, said the bank.
The Indian economy will continue to outperform China’s over the next two years, boosted by expanded private consumption as a result of rising wages and pensions, and improving rural incomes. The ADB expects India’s economy to grow by 7.4% in 2016 and 7.8% in 2017, compared with 7.6% last year.
The ADB said Asia’s mostly net-energy importers will benefit from the subdued inflationary outlook on account of oil prices likely staying near low levels for another year. Barring any new major supply disruptions, the bank expects the Brent crude price to average US$43 per barrel in 2016 and US$50 next year.
Regional inflation is hovering well below the 10-year average of about 4%, the bank said. Consumer prices are seen rising by 2.6% in 2016 and 2.9% in 2017.
On the other hand, the region’s net energy exporters will continue to feel the impact of weak oil prices now entering its third year since crashing in mid-2014.
“While many energy exporters have sovereign wealth funds to allow early windfalls to be applied to later contingencies, prolonged low energy prices will require reviews on how the funds should be managed and used,” said the ADB.
The region’s net energy exporters include Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, Mongolia, Brunei, Indonesia, Malaysia, Myanmar, Vietnam, and Papua New Guinea.