Indian growth story has received another affirmation after IMF and OECD, as the Asian Development Bank (ADB) in its landmark report Asian Development Outlook 2015 (ADO) has said that developing Asia, which groups 45 countries in Asia-Pacific, is set to grow 6.3 per cent this year and the next, the same pace as in 2014, while India and most Southeast Asian economies will lead the way, offsetting slowing growth in China.
The Manila-based bank in its report has said that India's economic growth is forecast to accelerate 7.8 percent this year from actual growth of 7.4 percent in 2014, a sharp increase from the ADB's December estimate of 6.3 percent growth, as the bank expects a rise in investments following reforms aimed at overcoming long-standing structural inefficiencies. It has further stated that growth in China is poised to cool from 7.4 percent last year to 7.2 percent this year and 7.0 percent next year, as authorities in the region's biggest economy make reforms in the face of a property downturn, factory overcapacity, and rising local debt.
ADB report has said that developing Asia is expected to post steady growth this year and the next, but a likely return to an upward cycle in US rates later this year may merit policy action to counter a reversal of capital flows. Rapid credit growth, with bank loans and bonds in the region’s 14 largest economies nearly doubled to $34.1 trillion in five years to 2013, supporting growth in the region.
The bank in its report has also cautioned that if the PRC (China) falters as it adjusts to its new normal, or if India reforms less decisively than anticipated, their slower growth could spill over to others in developing Asia, the region which accounts for nearly three-fifths of the world's annual GDP growth since the global financial crisis of 2009.
The ADO provides a comprehensive analysis of macroeconomic issues in developing Asia, including growth projections by countries and regions. The ADO has covered key economic areas like economic prospects for developing Asia and the Pacific, impacts of oil price changes on the economic outlook, risk of rising debt levels in developing Asia, the role of financial systems in supporting inclusive growth as well as approaches to expand financial inclusion.
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