Manila: The Asian Development Bank on Wednesday upgraded its 2006 economic forecast for the region, citing sizzling growth rates being posted by China and India. The bank however warned that countries in the region were vulnerable to what it said could be possible misjudged rate moves in Europe and the United States.
The Manila-based bank said that it expects Asian economies, excluding Japan, to expand by 7.7 per cent this year, an upgrade of the 7.2 per cent forecast that it had made in April, and up from 7.6 percent in 2005. It has projected a growth of 7.1 per cent for 2007, marginally higher than an initial forecast of 7 per cent, mainly due to expectations that demand from the United States and the European Union will ease and that oil prices will continue to cast a shadow over growth prospects.
For China, ADB says booming exports and investment will help push growth to 10.4 per cent in 2006, once again an upgrade of the initially forecast 9.5 per cent, and better than the 10.2 per cent rate posted by the communist giant in 2005. It also raised its forecast for the country's 2007 GDP growth to 9.5 per cent, from 8.8 per cent, saying that there would be a likely increase in public spending as the nation gears up for the 2008 Olympics.
As for India, which accounted for over 50 per cent of regional GDP together with China, ADB expects the country to grow by 7.8 per cent this year, up from an original forecast of 7.6 per cent growth. The bank said that strong domestic demand is being sustained by rising investment levels. Indian economy had clocked a growth rate of 8.4 per cent in 2005.
Its forecast for Southeast Asia sees the region grow 5.4 per cent in 2006, marginally down from an initial forecast of 5.5 per cent. It said that it sees the rate of expansion ease further to 5.3 per cent in 2007.