MANILA • The Asian Development Bank (ADB) yesterday raised its 2015 economic growth forecast for China slightly, supporting expectations that the world's second-largest economy will avert a hard landing this year.
ADB president Takehiko Nakao also said he did not expect an interest rate hike by the US Federal Reserve to trigger the return of a financial crisis in Asia, but the bank stood ready to lend support to countries vulnerable to "challenges".
The United States central bank is expected to raise interest rates for the first time in almost a decade at its Dec 15-16 meeting, raising some concern about capital flows out of Asia and emerging economies.
But Mr Nakao, a former Japanese vice-finance minister for international affairs, said Asia's financial systems had strengthened since the crisis of the late 1990s.
In its outlook update yesterday, the ADB said China's economy is expected to clock growth of 6.9 per cent in 2015, up from a previously expected 6.8 per cent. The agency maintained its 2016 forecast for growth at 6.7 per cent.
"Despite an ongoing housing overhang and excess industrial capacity, China's economy has remained resilient, supported primarily by private consumption and services," the Manila-based bank said, adding that fiscal and monetary stimulus measures should continue to provide support.
The lender maintained its growth projections for developing Asia at 5.8 per cent in 2015 and 6 per cent in 2016, a testament to the region's resilience to continued weakness in advanced economies.
"The region's growth is supported by vibrant private consumption in China and expanded industrial production in India and other countries," said ADB chief economist Shang-Jin Wei.
The region, which groups 45 countries in the Asia-Pacific, grew 6.2 per cent in 2014. The bank kept its growth forecast for India unchanged at 7.4 per cent for 2015 and 7.8 per cent for 2016.
It lowered its growth outlook for Central Asia to 3.2 per cent from 3.3 per cent for 2015 and 3.7 per cent from 4.2 per cent for 2016, but maintained estimates for East Asia and South Asia.
South-east Asia is still seen growing 4.4 per cent this year and 4.9 per cent next year, even as the ADB downgraded its growth forecast for Indonesia, due to slow government spending and weak exports.
Inflation in developing Asia in 2016 is now forecast to be slightly lower at 2.7 per cent, compared with the 3 per cent seen in September.