MANILA - The Asian Development Bank predicted Tuesday that developing Asia will grow at a steady 6.3 percent this year and next, buoyed by soft global commodity prices and a strengthening recovery in the major industrial economies.
Asian Development Outlook 2015, the ADB's annual economic publication, says developing Asia will maintain its "strong" economic growth in 2015 and 2016. The region grew 6.3 percent in 2014.
Developing Asia refers to the 48 members of the Manila-based bank that are in the region.
"Falling commodity prices are creating space for policymakers across the region to cut costly fuel subsidies or initiate other structural reforms," ADB chief economist Shang-Jin Wei said in the report.
"This is a key opportunity to build frameworks that will support more inclusive and sustainable growth in the longer term," Wei said. "Developing Asia is making a strong contribution to global economic growth."
From the trough of the global financial crisis in 2009, the report says developing Asia has contributed 2.3 percentage points to global gross domestic product growth, or nearly 60 percent of the world's annual 4 percent pace.
Eight economies in the region posted growth exceeding 7 percent in nearly every year of the post-crisis period, including China, Laos and Sri Lanka, it says.
"Growth in the U.S., where recovery seems to have turned a corner, is leading major industrial economies. While signs are mixed in the euro area and Japan, soft oil prices and accommodative monetary policy will support growth," the report says.
As a group, these economies are forecast to expand by 2.2 percent in 2015, up 0.6 percentage point from 2014 and 2.4 percent in 2016.
With improving external demand for the region's outputs, it says an expected pickup in India and in most members of the Association of Southeast Asian Nations could help balance gradual deceleration in China, the region's largest economy.
Growth slowed in China in 2014 on weak fixed asset investment, particularly in real estate.
"As the (Chinese) government proceeds with its structural reform agenda, further slowing of investment is expected to diminish growth to 7.2 percent in 2015 and 7 percent in 2016. This is a much more moderate rate than the average growth of 8.5 percent in the period since the global financial crisis," the report says.
India is forecast to overtake China in terms of growth as the initial phase of government efforts to remove structural bottlenecks is lifting investor confidence, the report predicts.
"With the support of stronger external demand, India is set to expand by 7.8 percent in fiscal year 2015 (ending March 31, 2016), a sharp rise from 7.4 percent growth in 2014. This momentum is expected to build to 8.2 percent growth in fiscal year 2016, aided by expected easing of monetary policy and a pickup in capital expenditure," the report says.
The report says risk to the outlook includes possible missteps in China as it adjusts to its new normal, less decisive action on reforms in India than anticipated, potential spillover effects on the global economy of the Greek debt crisis and the deepening recession in Russia.
Across the sub-regions, the report predicts the economic growth in East Asia will slow to 6.5 percent in 2015 and 6.3 percent in 2016 reflecting the moderation in China. The sub-region grew 6.6 percent in 2014.
Growth in South Asia accelerated to 6.9 percent in 2014 and is projected to trend higher to 7.2 percent in 2015 and 7.6 percent in 2016, reflecting the strong performance anticipated in India, the report says.
"Southeast Asia is poised for a growth rebound in 2015 after sub-regional growth fell to 4.4 percent in 2014. Aggregate growth is seen rebounding to 4.9 percent in 2015 and 5.3 percent in 2016 as the recovery in Indonesia and Thailand leads the way, and with most of the sub-region expected to benefit from rising exports and lower inflation," the report says.