By: M. Dinata*)
The Asian Development Bank (ADB) just released its annual outlook on Tuesday, 24 March 2015. In its statement, ADB is optimistic about Asia economic growth in 2016. Eventhough, China had announced its lowest economic growth in over 25 years, but it could be offseted by India and South East Asia economic growth, a U.S. economic recovery and by low world oil prices.
“Developing Asia’s growth is holding steady [and] forecast to be 6.3 percent for this year and next year. That’s a consequence of India, Indonesia doing better than the recent past, offsetting the moderation in growth rates in the PRC [People’s Republic of China],” ADB Chief Economist Shang-Jin Wei said. “Inflation pressure is lower due to a combination of domestic monetary policy reforms, such as in India, and lower commodity prices.”
The decision to cut down the fuel subsidies in several countries in Asia, including India and Indonesia, could make improvement in budget and fiscal outcome that can be used for social service. India is expected by ADB to be the booster of Asian economic growth. The India Government’s decision to remove “structural bottlenecks” will increase investors’ confidence. “This momentum is expected to build to 8.2% growth in financial year 2016, aided by expected easing of monetary policy and a pickup in capital expenditure,” the ADB said. However, ADB stated that in Central Asia, the economic growth will continue declining due to the weak oil prices and the impact from Russia’s recession.
ADB also said there might some unexpected issues that can affect Asian economic growth in 2016, such as policy “blunder” in China’s economic moderation, a slowing of India’s economic reforms, and the uncertainties of the Greek debt crisis. The main concern that have to be watched is the possibility of the raising U.S interest rate, which can make investment funds out from Asia and unsettle financial markets. Uncertainty time of the liftoff could also make unexpected movement from investors around the world.
*) The Author is Brunei Darussalam’s Contributor.
