Manila, Sep 17 (DPA) The Asian Development Bank (ADB) Monday upgraded its economic growth forecast for the Asia-Pacific region to 8.3 percent for 2007 because of robust growth in China and India but warned of a “fuzzy” outlook for 2008.
The new forecast, contained in the bank’s Asian Development Outlook Update, was up from the 7.6 percent growth predicted in March.
In 2008, growth was projected to slightly slow to 8.2 percent “as uncertainty reigns in global financial markets and worries about the health of the US economy mount”, the Manila-based bank said.
Its update noted that China and India, which account for 55.3 percent of the total gross domestic product in developing Asia, recorded their fastest growth in 13 years in the first half of 2007.
“Strong growth in China (now put at 11.2 percent) and India (8.5 percent) will spearhead expansion,” the report said, referring to the countries’ full-year growth forecast, “but there is a more general pattern of high and, in some countries, accelerating growth”.
It cited the Philippines, whose economy grew 7.3 percent in the first half of the year, the highest rate in almost 20 years. It also noted that growth in Indonesia was expected to top six percent in 2007.
The bank, however, remained cautious about the 2008 outlook for the region and warned that any slowdown in the US economy could cut the region’s growth.
“Recent convulsions in credit markets and the possibility of spillovers into the real economy heighten uncertainty about the future,” its report said.
“Events are still unfolding, and predictions at this time are unusually fuzzy with the chances of downward revisions becoming more likely,” it added.
The report warned that if the US economy “lurches down, developing Asia wound not be immune.
“Available evidence suggests that, depending on timing, severity and duration, a US recession could clip growth in developing Asia by one to two percentage points,” it said.
“If synchronous steep downturn in the US, euro zone, and Japan were to occur – an event that currently seems improbable – growth in developing Asia would be at greater risk,” the report added.
It also listed avian flu, geopolitical and security risks in some parts of the region and political uncertainty in a few countries as “downside risks obscuring the outlook for a number of economies”.