Varying growth prospects across subregions ----------
With the improving external environment, economic growth in East Asia as a whole is forecast to accelerate from 6.5% last year to above 7% this y...
ear and the next, surpassing once again the expansion in the other subregions of developing Asia (Figure 1.1.10). The positive spillover effects of more rapid expansion in the PRC—which reflects both rising domestic demand and improved export performance—will contribute to more robust growth in all East Asian economies, especially Taipei,China and Hong Kong, China (where the growth rate will likely more than double in 2013) and, to a lesser extent, in the Republic of Korea and Mongolia. As Southeast Asian economies are also tightly linked with the PRC, higher growth in the PRC in 2013 will support growth momentum in Southeast Asia. This subregion is forecast to grow by 5.4% in 2013, little changed from last year’s robust growth despite sluggish growth in the major industrialized economies. Factors that helped explain
the region’s growth acceleration in 2012 were two rebounds,
in Thailand from the impact of severe floods in 2011 and
in the Philippines from a slump in government investment.
In 2013, growth will benefit from generally accommodative
fiscal and monetary policies supporting consumption and
investment. Indonesia, the biggest economy in Southeast
Asia, is seen expanding by 6.5% in the forecast period, a slight
gain from 6.2% last year. In 2014, subregional growth as a
whole is expected to accelerate slightly, to 5.7%, as the outlook
improves for the industrial economies.
Economies in South Asia will depend on the turnaround
in India, which is contingent on reform in the South Asian
giant. Growth in the subregion is seen as rising to 5.7% in 2013 and 6.2% in 2014. The subregion’s anemic growth of 5.0%
in 2012 was due to India’s slowdown, marked by faltering investment, persistently high inflation, and tight monetary policy, compounded by weakening export demand during the year. Weaker exports also helped explain slower growth in Bangladesh and Sri Lanka. In Pakistan, a recovery from earlier severe floods helped raise growth despite a decline in exports.
Source: Asian Development Outlook database.
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