The Asian Development Bank (ADB) raised its growth projection for developing Asia citing stronger than expected exports and domestic consumption fuel growth.
Based on the supplement report to its Asian Development Outlook Update 2017, the Manila-based lender now expects the country's Gross Domestic Product (GDP) would expand by 6.7 percent this year, faster than the previous 6.5 percent projection. Growth projections for the United States remained unchanged at 2.2 percent in 2017 and 2.4 percent in 2018, the report showed.
The Finance Ministry's Fiscal Policy Office also recently raised its economic growth estimate for this year to 3.8% and roughly estimated that GDP growth would surpass 4% in 2018. Excluding Asia's newly industrialised economies, growth is now expected at 6.5 per cent this year.
Apart from Malaysia, growth forecasts are revised upwards for Brunei, the Philippines, Singapore, Thailand and Vietnam.
"Strengthening growth in private investment is expected to accelerate further in 2018, in line with improvement in exports and the implementation of the Eastern Economic Corridor (EEC) that aims to upgrade the seaboard provinces of Chachoengsao, Chon Buri and Rayong into a leading economic zone", the bank said. GDP growth however, reversed the decline in Q2 at 6.3 per cent. The projection for 2018 was kept unchanged at 5.8%.
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"Developing Asia's growth momentum, supported by recovering exports, demonstrates that openness to trade remains an essential component of inclusive economic development", Yasuyuki Sawada, ADB's chief economist, said. "Countries can further take advantage of the global recovery by investing in human capital and physical infrastructure that will help sustain growth over the long term". ADB had initially forecast growth rates of 7 per cent and 7.4 per cent for the current and next financial years. "Robust domestic demand-particularly private consumption and investment-will continue to support growth in the subregion", said the report.
Infrastructure investment continued to play an important role in Indonesia, the Philippines and Thailand.
ADB likewise hiked its growth projections for developing asia this year to six percent from 5.9 percent in September but retained its growth forecast of 5.9 percent for 2018.
"Export growth could reach 10% this year and come in slightly lesser in 2018 because of this year's high-base effect and export prices that are unlikely to rise compared with this year", Ms Kirida said.
The recovery in the Indian economy "is more subdued than assumed earlier due to rising crude oil prices, soft private investment growth and weather-related risks to agriculture", the ADB said. Established in 1966, ADB is celebrating 50 years of development partnership in the region.