The Asian Development Bank predicts developing Asia to grow at 6% in 2018 and 5.9% in 2019 with strong external and internal demand powering the economies. These rates compare to the ADB’s projection of 2.7% growth this year in the United States and 2.2% in the Euro area. Japan will chug along at 1.7% growth, the bank said.
The bank pointed to China’s torrid growth rates slowing as the country puts greater influence on financial stability. India will power ahead as it rebounds from recent economic reforms that caused its growth to temporarily pull back.
The bank expects only moderate inflation of around 2.9%, well below the region’s 10-year average rate. There are plenty of risks on the horizon of course – and any one of them could pull growth lower.
First on the list would be the escalation of trade tensions. If the US and China get into a full-fledged trade war, all the regions will suffer. As long as the war is one of words, however, growth will continue unabated.
As the US, in particular, raises interest rates, capital flows in Asia could reverse, and that could cloud the investment picture.
Finally, the overhang of bad debt is concerning. The bank said nations should push the quality of debt, closely monitor trends, and build more efficient financial systems. In general, the better the region’s fiscal and financial position, the better able it will be to handle any shocks to its economic or trade system, the bank said.
