Although economies are slowing across much of developing Asia due to the weak recovery in mature economies and softer growth in the People’s Republic of China (PRC), many countries in the region continue to grow robustly, says ADB's Chief Economist Shang-Jin Wei at the launch of ADB's Asian Development Outlook 2016.
Transcript
What is the new macroeconomic outlook for Asia and the Pacific as a whole?
Developing Asia is likely to grow somewhat less fast this year [2016] than its recent past. However, it is important to keep in mind that there are many economies in Asia that continue to grow very robustly, including Viet Nam, Bangladesh, India, Cambodia, and so on. Even for [the Republic of] China (PRC), the growth rate of 6.5% is still a very good rate.
What is the new macroeconomic outlook for PRC and India?
PRC, the largest economy in Asia, is projected to grow at 6.5% this year [2016] and 6.3% for next year [2017].
And for India, the growth rate is projected to be 7.4% this year [2016] and somewhat higher for next year [2017], making it the fastest growing large economy in the world.
What are the main risks to the outlook?
One risk is the uncertain path of US interest rates, which could affect many economies in Asia and the Pacific through trade linkages, capital flow and exchange rate pressures.
And the other risk is sharper-than-expected growth moderation in the PRC, which can also affect many economies in our region through trade linkages and consumption channels.
And the third risk to watch out for is producer price deflation. In normal times we expect producer price change and consumer price change to go together. But we are no longer living in a normal time, these two are diverging right now. Many more economies are experiencing PPI [Producer Price Index] deflation than CPI [Consumer Price Index] deflation, and PPI deflation have the potential to lead to a reduction in investment, so it’s an important risk to watch out for.
