Asian Development Outlook (ADO) 2017 Supplement: Cautious Optimism for Asia's Outlook
With export demand stronger than expected in the first quarter of 2017, the region’s GDP is forecast to expand somewhat faster than forecast in April in Asian Development Outlook 2017.
Developing Asia is now expected to grow by 5.9% in 2017, or 0.2 percentage points higher than the rate previously envisaged. The smaller upgrade in the 2018 growth forecast—5.7% in ADO 2017 to 5.8%—reflects a cautious view on the pace of the turnaround in external demand. Excluding the newly industrialized economies of the Republic of Korea (ROK), Singapore, Taipei,China, and Hong Kong, China, growth projections for the region are revised up to 6.4% for 2017 and to 6.3% for 2018. Projections are upgraded for Central and East Asia but unchanged for the other three subregions.
The combined growth forecast for the major industrial economies—the United States, the euro area, and Japan—is retained from ADO 2017. Although the growth projection for the US this year is now 0.2 percentage points lower in the wake of disappointing first quarter results, upward revisions for the euro area and Japan, supported by robust domestic demand, compensate to maintain the collective forecast.
- Unanticipated external demand has improved growth prospects for developing Asia, prompting this Supplement to upgrade the growth forecast for the region from 5.7% to 5.9% this year and from 5.7% to 5.8% in 2018. Excluding Asia’s high-income newly industrialized economies, growth should hit 6.4% this year and 6.3% in 2018.
- The resulting boost to net exports all but suspends growth moderation in the People’s Republic of China, which is now expected to expand by 6.7% in 2017 and 6.4% in 2018, while lifting the pace of growth this year in the Republic of Korea and Taipei,China. This Supplement raises East Asia’s growth projections from 5.8% to 6.0% for 2017 and from 5.6% to 5.7% for 2018.
- India is expected to achieve April forecasts of 7.4% growth in 2017 and 7.6% in 2018, primarily from strong consumption. Growth projections for South Asia are likewise maintained as prospects remain robust.
- High first quarter growth in Malaysia, the Philippines, and Singapore keeps Southeast Asia on track to meet forecasts of 4.8% growth this year and 5.0% in 2018.
- Central Asia is recovering more strongly than expected, prompting upgraded forecasts in this Supplement. The Pacific will likely realize earlier projections.
- Ample supply has held world oil prices low despite rising demand, while favorable weather has kept food prices stable. This Supplement forecasts inflation in 2017 at 2.6%, revised down by 0.4 percentage points, and at 3.0% next year.