The Asian Development Bank (ADB) upgraded on Wednesday its gross domestic product (GDP) forecast in developing Asia, saying that economic expansion in the region will accelerate to 6 percent in 2017 as stronger-than-expected exports and domestic consumption fuel growth.
Excluding Asia's newly industrialized economies, a new ADB report says growth is expected at 6.5 percent this year.
In a supplement to its Asian Development Outlook Update 2017 report, ADB upgrades its 2017 GDP outlook in the region by 0.1 percentage points compared to its September 2017 forecast, while its 2018 forecast remains unchanged at 5.8 percent.
An unexpectedly strong expansion in Central, East, and Southeast Asia has offset a downward adjustment in South Asia, the report says.
"Developing Asia's growth momentum, supported by recovering exports, demonstrates that openness to trade remains an essential component of inclusive economic development," said Yasuyuki Sawada, ADB's chief economist.
Sawada said, "Countries can further take advantage of the global recovery by investing in human capital and physical infrastructure that will help sustain growth over the long-term."
The report says combined growth for the major industrial economies is revised upward to 2.2 percent for 2017 and 2 percent for 2018, due to robust domestic demand in the euro area, and in Japan due to private investment and net exports.
Growth projections for the United States remain unchanged at 2.2 percent in 2017 and 2.4 percent in 2018, according to the report.
By subregion, the report says growth for East Asia is revised upward to 6.2 percent in 2017, from 6 percent, while 2018 projections of 5.8 percent are unchanged.
Growth prospects in China, the world's second largest economy, are revised up on resilient consumption. China's economy is expected to expand by 6.8 percent in 2017 and 6.4 percent in 2018.
The report says South Asia will remain the fastest growing of all subregions in Asia and the Pacific, despite a downward revision from previous projections from 6.7 percent to 6.5 percent in 2017, and is expected to pick up to 7 percent in 2018. GDP growth in India, the subregion's largest economy, is revised down to 6.7 percent in 2017 and 7.3 percent in 2018.
Although the strong manufacturing expansion helped the economy reverse five consecutive quarters of deceleration in the second quarter of fiscal year 2017, it says the recovery is more subdued than assumed earlier due to rising crude oil prices, soft private investment growth, and weather-related risks to agriculture.
The report says growth for Southeast Asia is picking up faster than earlier forecast with GDP set to expand by 5.2 percent in 2017 and 2018, compared to September 2017 forecasts of 5 percent and 5.1 percent.
It says the subregion is benefiting from stronger investments and exports, with accelerating growth for Brunei, Malaysia, the Philippines, Singapore, and Thailand, adding that infrastructure investment continued to play an important role in Indonesia, the Philippines and Thailand.
Robust domestic demand, particularly private consumption and investment, will continue to support growth in the subregion, according to the report.
The outlook for Central Asia this year has further improved as stronger domestic demand and exports in some countries have fueled recovery in the subregion. Growth is expected to reach 3.6 percent in 2017 compared to the 3.3 percent originally projected. The 2018 forecasts for Central Asia are unchanged at 3.9 percent.
The report says that growth in the Pacific is expected to remain at 2.9 percent in 2017 and 3.2 percent in 2018 with Papua New Guinea, the subregion's largest economy, continuing its gradual recovery due to rebounding mining and agriculture industries.
Post-disaster reconstruction and tourism are expected to drive growth further in the subregion, particularly in Fiji and Vanuatu, the report says.