2 ASIAN DEVELOPMENT OUTLOOK SUPPLEMENT
Table 1 Gross domestic product growth (%)
201720182019
ADO
2018ADOS
ADO
2018ADOS
Developing Asia6.16.06.05.95.9
Developing Asia excluding the NIEs6.66.56.56.46.4
Central Asia4.34.04.24.24.3
Kazakhstan4.03.23.73.53.9
East Asia6.36.06.05.85.8
Hong Kong, China3.83.24.03.03.0
People’s Republic of China 6.96.66.66.46.4
Republic of Korea3.13.03.02.92.9
Taipei,China2.92.93.02.82.8
South Asia6.57.07.07.27.2
India 6.77.37.37.67.6
Southeast Asia5.25.25.25.25.2
Indonesia5.15.35.25.35.3
Malaysia5.95.35.35.05.0
Philippines6.76.86.86.96.9
Singapore3.63.13.12.92.9
Thailand3.94.04.24.14.1
Viet Nam6.87.17.16.86.8
The Pacific2.22.22.23.03.0
ADO
=
Asian Development Outlook
,
ADOS
=
ADO Supplement,
NIEs = newly
industrialized economies (Hong Kong, China; Republic of Korea; Singapore; and
Taipei,China).
Note:
Developing Asia refers to the 45 members of the Asian Development
Bank listed below. Central Asia comprises Armenia, Azerbaijan, Georgia,
Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan.
East Asia comprises Hong Kong, China; Mongolia; the People’s Republic of China,
the Republic of Korea, and Taipei,China. South Asia comprises Afghanistan,
Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Southeast
Asia comprises Brunei Darussalam, Cambodia, Indonesia, the Lao People’s
Democratic Republic, Malaysia, Myanmar, the Philippines, Singapore, Thailand,
and Viet Nam. The Pacific comprises the Cook Islands, the Federated States of
Micronesia , Fiji, Kiribati, the Marshall Islands, Nauru, Palau, Papua New Guinea,
Samoa, Solomon Islands, Timor-Leste, Tonga, Tuvalu, and Vanuatu.
Sources:
Asian Development Bank. 2018.
Asian Development Outlook 2018
;
ADB estimates.
in manufacturing output and higher electricity generation.
The purchasing managers’ indexes for manufacturing
and services are broadly unchanged from 2017, still
indicating expansion. Production controls implemented for
environmental reasons were relaxed in February, boosting
heavy industry. As a slight moderation in growth is still
expected in the second half of 2018, the PRC economy is still
forecast to grow by 6.6% in 2018 and 6.4% in 2019, unchanged
from
ADO 2018
. Downside risks stem from evolving foreign
trade and investment conflicts with the US.
In the Republic of Korea, GDP expanded by 2.8% in Q1
of 2018, as in Q4 of last year. Private consumption grew
strongly by 3.5%, benefitting from the hosting of the 2018
Winter Olympic Games. Government consumption likewise
rose to 5.8% on expanded health care benefits. Investment
East Asia
The growth outlook for East Asia is maintained at 6.0%
in 2018 and 5.8% in 2019, with slight upward revisions for
two economies: Hong Kong, China and Taipei,China. Hong
Kong, China started the year on a strong note with growth
at 4.7% in Q1 of 2018 (year on year, here and below, unless
otherwise specified), the highest rate in almost 7 years.
Domestic demand remained strong, while external demand
picked up as the global economy sustained broad-based
momentum. Favorable labor markets and positive consumer
sentiment, as well as higher asset prices, bolstered private
consumption growth to 8.6%. Investment rose by 3.8%,
reflecting growth in machinery and equipment acquisition
and modest expansion in building and construction. The
upswing in global investment and trade boosted growth in
goods exports by 5.2%, while a strong recovery in inbound
tourism, active global financial markets, and buoyant
regional trade flows lifted exports of services by 7.5%.
Hong Kong, China is expected to stay on a robust track this
year, though growth has likely peaked and will slow in the
coming quarters as global trade tensions escalate and US
interest rates rise. Even so, exceptionally strong growth in
Q1 pushes up the growth forecast to 4.0% for 2018 from
3.2% in
ADO 2018
. For 2019, the forecast is maintained at
3.0% in light of strengthening headwinds.
Taipei,China recorded economic growth at 3.0% in Q1 of
2018, down from 3.4% in Q4 of the previous year but slightly
better than the 2.9% rate for the whole of 2017. Private
consumption was the largest contributor to growth with 1.6
percentage points, followed by government consumption
with 0.9 points and net exports with 0.8 points, while
gross capital formation subtracted 0.4 points. Merchandise
exports grew by 14.2% in May, exceeding expectations.
Private consumption is likely to remain robust with
accelerating wage growth. Public investment is expected to
increase as the first stage of the government’s infrastructure
spending plan is now being executed. The growth forecast
for 2018 is 3.0%, revised up from the 2.9% forecast in
ADO 2018
in April. This reflects unexpectedly high public
consumption and a continuing strong performance in
exports. The forecast for 2019 is unchanged at 2.8%.
In the PRC, the largest economy in the region, GDP
expanded by 6.8% in the first half of 2018, supported by
strong private consumption and robust investment in real
estate and manufacturing. Nominal growth in retail sales
was solid, bolstered by buoyant consumer confidence,
higher disposable income, and a tight labor market.
Exports remained strong as recovery in global demand
continued. Healthy domestic demand prompted imports to
rise faster than exports, thus reducing the contribution to
growth from the external sector. Growth in nominal fixed
asset investment decelerated from 7.2% in 2017 to 6.0%
in January–June as growth in infrastructure investment
declined sharply. This is the softest such expansion in
decades. Industrial production growth edged from 6.6% in
2017 to 6.7% in January–June, driven by a robust pickup
ASIAN DEVELOPMENT OUTLOOK SUPPLEMENT 3
Box 1 Outlook for the major industrial economies
The major industrial economies of the United States,
the euro area, and Japan are on track to meet growth
expectations in
ADO 2018
. Aggregate growth forecasts for
the three economies are unchanged at 2.3% in 2018 and 2.0%
in 2019. The US economy continued its healthy growth pace
in Q1 of 2018, supported by private investment. Euro area
growth remains healthy, despite a slowdown in Q1, with
improving labor markets, accommodative monetary policy,
and fiscal support. In Japan, however, recovery lost steam
after 8 consecutive quarters of expansion.
After recording 2.3% annual GDP growth in 2017, the
US economy grew at a seasonally adjusted annualized rate
(saar) of 2.0% in Q1 of 2018. Private investment contributed
more than half of growth, overtaking consumption in the
role of top contributor. The surge in private investment was
primarily driven by nonresidential fixed investment, which
grew by 10.4% saar. The contribution of consumption declined
mainly because of a drop related to motor vehicles. Consumer
confidence and retail sales remained strong in the first half
of 2018, indicative of a continuing rebound in consumption.
The industrial production index continued to rise in the first
5 months of 2018, and the purchasing managers’ index also
remained strong to June, both suggesting that expansion in
US production will continue. This momentum seemed to
encourage domestic investment, as did new tax incentives,
improving the unemployment rate to an historic low rate of
4.0% in June despite a 601,000 jump in the labor force as
participation increased. Headline inflation reached 2.8% in
May, with core inflation at 2.2%. Rising inflation and a falling
unemployment rate may prompt the Federal Reserve to has