Demonetisation will dampen growth: ADB

Slower growth is now expected in India, one of the largest economies

GN Bureau | December 13, 2016


#demonetisation   #Asian Development Outlook 2016 update report   #Asian Development Bank  
Asian Development Bank
Asian Development Bank

India’s surprise demonetisation of Rs 500 and Rs 1,000 banknotes will likely dampen growth this year, but South Asia remains the region’s fastest-growing sub-region, said the Asian Development Bank in a supplement to its Asian Development Outlook 2016 update report.

Developing Asia’s growth outlook continues to be stable despite a slight downgrade, the report added.

The region is now expected to grow this year by 5.6 percent, or 0.1 percentage point off the rate envisaged in Asian Development Outlook update as slower growth is now expected in India, one of the region’s largest economies. Growth is expected to edge back up to 5.7 percent in 2017, the pace envisaged in the update. By sub-region, growth forecasts are revised slightly down for South Asia in 2016 and the Pacific in 2017 but otherwise unchanged.

The combined growth forecast for the major industrial economies — the United States, the euro area, and Japan — is revised up from update projections as third-quarter outcomes in the US and euro area proved to be stronger than expected. Robust consumer spending growth supported the US economy, while supportive monetary policy and improving labour markets fuelled growth in the euro area. Despite a stronger yen, the external sector still led the expansion in Japan.

Despite an extraordinary and temporary growth dip affecting one of the region’s largest economies, this supplement expects the region as a whole to expand by 5.6 percent in 2016, only 0.1 percentage points less than earlier forecast, and by 5.7 percent in 2017, as forecast.

China is on course to meet growth expectations of 6.6 percent in 2016 and 6.4 percent in 2017. East Asia as a whole is seen to expand by 5.8 percent this year and 5.6 percent in 2017 as growth stabilises in the sub-region in line with earlier forecasts.

India’s demonetisation will likely dampen growth this year, but South Asia remains the region’s fastest-growing sub-region. It is now expected to grow in 2016 by 6.6 percent, or 0.3 percentage points less than previously forecast, and in 2017 by 7.3 percent, as in the update.

Growth in the major Southeast Asian economies in the third quarter met projections and even surpassed them in Malaysia and the Philippines. In aggregate, the sub-region is still forecast to expand by 4.5 percent in 2016, picking up to 4.6 percent in 2017.

The continued rise in commodity prices has not sufficed to offset fiscal drag in the oil-producing economies of Central Asia. Forecasts in the Pacific are largely unchanged from the update, though cyclone damage in Fiji is seen to be having a bigger impact on its economy than earlier envisaged.

Although oil price prospects brightened with the agreement of major oil producers to cut production beginning in 2017, inflation remains subdued.

 

Comments

 

Other News

Going generic

While the centre has encouraged drug stores that sell generics (as opposed to branded medicines) under the Jan Aushadhi scheme, states have obtained mixed results in the implementation. In Andhra Pradesh, for instance, there are few stores selling generics, but they are unique in that they are run by all-w

PNB fraud: Former RBI deputy governor had warned about SWIFT

A top Reserve Bank of India official had waved the red flag, a year back, regarding the SWIFT messaging system. SWIFT was used in a fraud amounting to Rs 11,000 crore at a Punjab National Bank branch that benefited billionaire diamond jeweler Nirav Modi.   Former RBI deputy gover

What happened to Anshu Prakash

Delhi chief secretary Anshu Prakash’s claim that he was manhandled by Aam Aadmi Party (AAP) lawmakers in the presence of Delhi chief minister Arvind Kejriwal has kicked up a storm. Here is what transpired on Monday night and the events that unfolded through Tuesday.  

Is banks` messaging system SWIFT secure enough?

Is banks` messaging system SWIFT secure enough?

Modi post Modi: “It is a question of your leadership…”

Diagnosing what ails India’s governance, Bihar chief minister Nitish Kumar used to name three units or offices that are so corrupted that they are beyond redemption: village patwaris, police station darogas and Railways ticket collectors. In his stint as executive head of Bihar, he seems to have incl

Could RTI have saved banks from scams?

Could RTI have saved banks from scams?

Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter