Asian Development Outlook (ADO) 2016 Supplement: Asia's Growth Prospects Undimmed by Brexit Vote
Developing Asia’s growth outlook this year is revised slightly down from that published in March in Asian Development Outlook 2016 with growth forecast for developing economies at 5.6%. For 2017, growth is seen unchanged at 5.7%.
Growth in Central Asia is weaker than predicted, while expansion in the Pacific is now expected to be a touch higher. Forecasts are unchanged for East, South, and Southeast Asia. While the Brexit vote has affected developing Asia’s currency and stock markets, its impact on the real economy in the short term is expected to be small.
- Developing Asia’s prospects remain largely in line with forecasts in Asian Development Outlook 2016, despite disappointing growth in the United States and a surprise Brexit vote outcome that chilled already tepid recovery in the euro area. This Supplement expects the region to expand by 5.6% in 2016—0.1 percentage points less than earlier forecast—and 5.7% in 2017
- The People’s Republic of China is on track to meet forecast growth of 6.5% in 2016 and 6.3% in 2017. East Asia is seen to expand by 5.7% this year and 5.6% in 2017 notwithstanding softness in Taipei,China and Hong Kong, China.
- Similarly, India has shrugged off global headwinds and is expected to grow by 7.4% in 2016 and 7.8% next year. South Asia as a whole will be the region’s fastest growing subregion.
- First quarter 2016 growth in the major Southeast Asian economies also met projections except that Viet Nam fell short as bad weather dragged on agriculture. In aggregate, the subregion is forecast to expand by 4.5% in 2016, picking up to 4.8% in 2017.
- With fiscal pressures from continued low oil prices more acute than anticipated, the growth forecast for Central Asia is adjusted down by 0.4 percentage points to 1.7% in 2016, but the pace is still expected to pick up next year. The Pacific as a whole should meet forecasts as tourism boosts some economies and lagging disasterrecovery spending holds back others.
- Oil prices may have picked up somewhat more strongly than forecast, but local factors are having a bigger impact on average regional inflation. In particular, higher food prices in the People’s Republic of China boost regional inflation forecasts by 0.3 percentage points, to 2.8% in 2016 and 3.0% in 2017.