ADB says Asia growth robust but worried about oil
Asian economic growth will remain strong this year, boosted by China and India, but expensive oil could slow regional activity from next year, the president of the Asian Development Bank (ADB) said on Friday.
“Surprisingly, developing Asia is maintaining robust growth. Our 2005 forecast will be broadly maintained,” Haruhiko Kuroda told journalists at a lunch in Singapore, adding the ADB also expected growth in 2006 to be around 6.5 percent.
In April, the ADB forecast economies in the region, excluding Japan, would grow 6.5 percent this year and 6.6 percent in 2006.
Kuroda said Asian economic growth was dominated by rapid expansion in China and India.
“China’s economy shows no signs of deceleration. India also shows no signs of deceleration, and could even accelerate,” he said.
Kuroda said the resilience of Asian economies in the face of high oil prices was helped by robust growth in the United States, signs of a recovery in Japan, and positive signs even in the euro zone.
But oil prices , which hit a record high of almost $71 a barrel this week, could undermine growth next year.
“At this stage there is great uncertainty over growth in 2006 and 2007 because of oil,” Kuroda said.
“There is very little prospect for oil to go back to around $40. This will severely negatively affect growth prospects in Asia,” he said.
Kuroda also said that oil subsidies in Indonesia needed to be reduced to strengthen the country’s fiscal position.
Kuroda is in Singapore to attend a closed-door seminar on Saturday on regional financial integration, jointly held by the IMF and the Monetary Authority of Singapore.
Source: in.today.reuters.com
