China’s economy to grow slightly faster than expected

South Asia on track to meet previous growth projections

Manila, December 3

China’s economy will grow slightly faster than expected this year at 6.9 per cent and its shift to fostering services and private consumption is helping to support regional growth, Asian Development Bank (ADB) said today.

An ADB report said Asia’s developing economies remain resilient to economic weakness in industrialised countries and are on track to grow 5.8 per cent in 2015 and six per cent in 2016. It said Asia’s growth is supported by vibrant private consumption and services in China. Expanded industrial production in India and other countries also buttressed the regional economy even as countries reliant on commodities were hurt by the global slump in prices, a slow US recovery and Japan’s contraction.

“Though we’ve seen some softening in a number of economies, broader regional outlook is for steady growth,” said ADB Chief Economist Shang-Jin Wei.

The ADB in September forecast China’s economy to grow 6.8 per cent this year and 6.7 per cent next year. Today’s report maintains the forecast for 2016, saying further growth in consumption and services will support the economy despite a housing overhang and excess industrial capacity.

Central bank and government measures to stabilise the economy and to bolster small and medium-sized enterprises also provide some comfort, it said.

Chinese growth has slowed steadily over the past five years as the ruling party tried to steer the economy to a more sustainable expansion based on domestic consumption instead of trade and investment.

East Asia’s growth forecast is maintained at six per cent for both 2015 and 2016.

Southeast Asia’s growth prospects were also unchanged from September’s forecasts of 4.4 per cent for 2015 and 4.9 per cent for 2016. But a slight softening is seen for Indonesia due to lower-than-expected budgetary disbursements and weakness in exports.

The report said South Asia is on track to meet previous growth projections of 6.9 per cent in 2015 and 7.3 per cent in 2016. Continued strength in India supported by growth in industrial production, public capital expenditure, and retail sales are helping to offset slowdowns in Bhutan, Maldives and Nepal. Forecast growth for India was maintained at 7.4 per cent in 2015 and 7.8 per cent next year.Outlook for Central Asia was downgraded to 3.2 per cent in 2015 from 3.3 per cent, while projection for 2016 is 3.3 per cent from earlier forecast of 4.2 per cent.