Bangladesh economy to grow 6.9pc this year: ADB

The Gross Domestic Product in Azerbaijan will decline 1.1% this year, Asian Development Bank said in its outlook for 2017.

India recorded a growth rate of 7.1 per cent during 2016-17, notwithstanding the fears that demonetisation of high-value currency notes of Rs 500/1,000 in November a year ago would adversely impact the economic growth.

"Excluding the high-income newly industrialized economies of South Korea, Singapore, Taiwan and Hong Kong, regional growth is expected to reach 6.3 percent in 2017 and 6.2 percent in 2018", the report said.

The recovery in global oil prices sets the stage for a modest recovery in Central Asia, with growth of 3.1% seen for 2017 and 3.5% for 2018, after slowing to 2.1% in 2016. To mitigate India's vulnerability to oil price swings, the government has proposed reducing dependence on imported oil by 10 per cent over the next five years through more efficient domestic production and increased private investment into the sector.

The country is expected to have clocked a growth rate of 7.1 per cent in 2016-17, despite apprehensions that the note ban, announced in November previous year, has dented consumption as well as investment.

If those rate increases come more rapidly because of stronger than expected United States economic growth, the "sharper than expected monetary tightening could have further consequences for developing Asia", the ADB said in its Asian Development Outlook.

"A smaller share of government-led investment projects contributing to growth points to some positive changes in the structural reforms", said Zhuang Jian, a senior economist with the bank.

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South Asia, however, will see a faster 7.0% average.

Total exports are projected to grow by 22.6 percent in 2017 with the projected improvement in oil prices and expand by a further 15 percent in 2018 as the Shah Deniz gas field starts producing. Exports are forecast to grow by six per cent in the coming year.

"Speeding up implementation of the Industrial Development Policy 2015-2025 will lower the cost of doing business and improve productivity growth and competitiveness through regulatory reform, and investments in infrastructure, logistics and a broader range of skills", Mr. Tukuafu said.

In addition, the authorities should develop an effective stress-testing framework, introduce long-term foreign exchange risk hedging, and take steps to establish inflation targeting that could support the national currency over the medium-to-long term, the report further notes.

Asian Development Bank expects the upcoming federal budget in June 2017 which would be likely to prioritize measures envisaging steps to foster economic expansion in 2017-18 fiscal year, the election year.

Economies with high corporate or household debt in particular would be most vulnerable to the shock of higher interest rates, the report said.

"The economic outlook is subject to downside risks, both domestic and external while domestic risks stem from vulnerabilities in the financial sector partly traceable to its rapid expansion, in particular the proliferation of microfinance institutions".

  • Myrtle Hill