Recently released macroeconomic indicators suggest the2010 growth outlook or developing Asia is stronger thananticipated in the
Asian Development Outlook (ADO) 2010
released in April. Gross domestic product (GDP) in theregion is now projected to grow 7.9%, up rom the 7.5%originally orecast. Better-than-expected results in the frstquarterdriven by buoyant exports, strong private demand,and sustained stimulus policy eectsare behind therevision.Te improved outlook is broad-based, with projections raisedacross most subregions. Nonetheless, downside risks in thesecond hal o the year call or continued caution, includingthe uncertain global environment, the sustainability o private domestic demand growth, and the challenge o managing capital inows and exchange rates. As such, GDPgrowth in 2011 is still projected at 7.3%.In East Asia, the newly industrialized economies o HongKong, China; Republic o Korea; and aipei,China areexpected to post stronger growth due to impressive frstquarter perormances. Improved investment has helpedsupport the recovery. Industrial production and consumerspending started picking up in the frst hal o the year,with exports recovering signifcantly. While the economy in the People’s Republic o China grew 11.1% in the frsthal o 2010, the GDP growth orecast or the year has beenmaintained at 9.6%. Recent measures to slow credit growthand cool speculation in the property market will likely leadto slower investment in the coming quarters. Fixed-assetinvestment growth slowed to 25.5% in the second quarter,the lowest rate o expansion since the stimulus packagewas announced in 2008. Industrial output fgures and thepurchasing managers’ index also suggest a so landing. First quarter growth in the ASEAN-5 economies (Indonesia,Malaysia, Philippines, Singapore and Tailand) also exceededexpectations, ueled by strong exports, robust industrialproduction, and improved consumer confdence. Singaporeis set or a solid 2010 aer growing 18.1% in the frst hal. Tetrade-driven economy’s growth projection has been upgradedsharply to 12.5% rom the 6.3% orecast in April, amid robustdemand or its manuactured exports, particularly biomedicalproducts and semiconductors.In the Philippines, election-related government spendinghelped propel growth to a strong 7.3% in the frst quarter.While this is unlikely to be sustained through the year, with thegovernment already above its fscal defcit target, growth in 2010has still been upgraded to 5.0% (rom 3.8%). Robust industrialproduction and strong export growth look likely to continue.Indonesia, Malaysia, and Tailand are also expected tooutperorm the
orecasts. Malaysia and Tailandposted double-digit growth in the frst quarter o 2010,although the pace mostly reects a rebound rom the 2009contraction. Nevertheless, Malaysian growth is now expectedat 6.8% in 2010, rom 5.3%, supported by robust privateconsumption and investment and recovery in exports dueto the stronger global economic expansion. In Tailand,despite the major disruption o protests in central Bangkok,the economy is orecast to grow 5.5% (rom about 4.0%originally) on healthy exports and an expected recovery intourism toward the end o the year. Indonesia’s economy,driven by strong domestic demand, is now projected toexpand 6.0%, revised up rom 5.5%. Forecasts or the resto the Southeast Asian economies should meet previousexpectations. In South Asia, economic indicators remain broadly withinexpectations. GDP growth in India reached 8.6% (year-on-year) in the frst quarter, which is consistent with thecurrent orecast o 8.2% or the year. In Sri Lanka, post-conict reconstruction is pushing up demand such that frstquarter growth reached 7.1%, suggesting growth or the yearmay be more rapid than the
estimate. Industrialproduction and exports are increasing in both economies.Asset price build-up in Bangladesh has boosted domesticdemand, with preliminary government estimates showing theeconomy expanded 6.0% in fscal year 2010 (ending June 2010).
Developing Asia’s Recovery Gains Momentum