ADB projects 7.7% growth in 2006 for developing Asia

Singapore, Sep 6 (UNI) Developing Asia's strong economic expansion is expected to continue with growth projected at 7.7 per cent in 2006 before easing to 7.1 per cent in 2007, the Asian Development Bank (ADB) said today.

''Developing Asia's rapid growth is underpinned by strong performances by China and India, which together account for more than 50 per cent of regional GDP,'' said ADB Chief Economist Ifzal Ali at the launch of the Asian Development Outlook 2006 Update (ADO) in Manila.

''The region should take advantage of this strength to act in three areas that could undermine growth if not addressed - the need to complete the adjustment to high oil prices, the need to pick up the pace of fiscal consolidation, and the need to stimulate investment,'' he said.

If China and India are removed from the calculation, the remaining countries of developing Asia are expected to grow by more modest averages, 5.5 per cent in 2006 and 5.1 per cent in 2007.

The ADO Update is a supplement to ADB's annual flagship publication, Asian Development Outlook 2006, which was published in April and forecasts economic trends in the region.

The 7.7 per cent growth forecast for 2006 represents a 0.5 percentage point increase from the April forecast. The upward revision significantly reflects accelerated growth in China due to booming investments and exports. ADO Update forecasts 10.4 per cent growth for China in 2006.

Upward revision to growth forecasts of the three larger South Asian economies - Bangladesh, India, and Pakistan - on the back of strong export growth also fed the upward adjustment.

For 2007, ADO Update forecasts growth of 7.1 per cent for developing Asia, up marginally from the 7.0 per cent forecast in April. The easing from 2006 growth is anticipated based on expected slower demand from industrial countries and continuing high oil prices.

ADO Update's forecast for 2007 rests heavily on the assumptions that policy adjustments in China will slow the economy to a more moderate 9.5 per cent expansion and that India continues to grow at 7.8 per cent.

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