Asian Development Outlook 2008
) is the 0th edition o the annual comprehensive economic report on the developing membereconomies o the Asian Development Bank. Tis year’s
eatureschanges that aim to serve readers’ needs better and enhance the relevanceo content.Parts and provide an assessment o recent economic perormanceor 44 developing economies in Asia, and projections or majormacroeconomic indicators or 008 and 009.In 007, developing Asia grew by 8.7%, the astest recorded rateo growth since 988. Te People’s Republic o China (PRC) and Indiaboth grew at an exceptionally rapid pace, and several other countries,including the Philippines, enjoyed the astest growth in decades.But in the latter part o 007, the global economic outlook beganto turn. Problems that germinated in the United States (US) subprimemortgage and housing market began to spread and ampliy. A coincidentslowing o growth is now under way in the G economies (Europe, Japan,and US). Tere is still considerable dissonance about the extent andduration o the expected slowdown, and the ull extent o problems in USandpossibly Europeancredit markets is yet to be revealed.In this dicult environment, economic activity in developing Asia isexpected to remain strong and growth o 7.6% is expected in 008. Tissolid perormance in an unsteady global economy is underpinned by avorable policy conditions, strong productivity growth, and the ongoingstructural transormation o Asian economies. Still, growth projectionsor 008 and 009 are slightly below the recent historical trend indeveloping Asia.Developing Asia will not be immune to the global economicslowdown, nor will it be hostage to it.
eatures an examinationo how the G downturn could be transmitted to developing Asia andconcludes that trade channels remain an important conduit or thetransmission o shocks. As yet, market penetration by Asian suppliers inthe PRC’s nal goods markets is limited, and strong growth in the PRCwill provide only a limited cushion against the G downturn.In the past decade, developing Asia has become much more deeply integrated with global nancial markets, raising the potential orcontagion. But Asia’s nancial systems are likely to be spared a creditcrunch, though there may be some tightening in credit markets. Asia’sbanks, which still dominate private nancial markets, are generally wellcapitalized and there does not appear to be substantial value at risk ontheir balance sheets.In the near term, the major risk lies not so much in soer growthbut in rising commodity prices and accelerating ination. I inationexpectations are allowed to become ingrained, this could createdistortions that damage productivity growth over a protracted period.Tough measures to restrict the impact o rising ood prices on thepoor are understandable, these should not be allowed to jeopardize