The Asian Development Bank (ADB) maintains that in the next two years the developing Asian countries will drive the world economy. However, at the same time ADB warned of uncertainties from the United States (US) and Europe. The ADB's flagship Asian Development Outlook said that with China's expansion seen moderating, India, Malaysia, Indonesia and Vietnam will be behind an expected 5.7 per cent increase in Asia-Pacific gross domestic product (GDP).
The ADB's chief economist, Yasuyuki Sawada, said in a statement that the developing Asia continues to drive the global economy even as the region adjusts to a more consumption-driven economy in the People's Republic of China.
The Manila-based regional ADB also warned that the uncertain outlook in the economy of the US and Europe threw up risks. Expectations are there for the Federal Reserve to raise interest rates further this year (2017) as the US economy continues to strengthen - having already been lifted interest rates twice since December 2016. Higher Federal Reserve borrowing costs tend to hit global emerging economies as it means investors withdraw their cash to seek better and safer returns in the US. The ADB said that rising consumer and business confidence and a declining unemployment rate have fuelled the US growth, but uncertainty over future economic policies may test confidence.
The US President Donald Trump's warnings to revise global trade deals are also lingering worries and fuel speculation that he could spark a global trade war. Again, any potential growth was clouded by the uncertainty of Britain's decision to leave the European Union. Sawada, however, added that while uncertain policy changes in advanced economies do pose a risk to the global economic outlook, most economies are well positioned to weather potential short-term shocks.
With India rebounding from demonetisation that temporarily hit the Indian economy, the growth in South Asia is expected to hit 7.0 per cent in 2017 and 7.2 per cent next year 2018, according to ADB. In an effort to tackle widespread corruption and tax evasion Indian Prime Minister Narendra Modi unleashed chaos late 2016 with a shock move to withdraw high-denomination rupee notes from circulation. The move suppressed cash-intensive economic activity, but that impact is expected to be short lived, according to ADB. Expectations are like that the India's growth is expected to hit 7.4 per cent in 2017 and 7.6 per cent in 2018.
As for Bangladesh, the foreign observers praise its socio-economic uplift. Danish Development Cooperation Minister Ulla Tornaes, who visited Dhaka on the occasion of the 136th Inter-Parliamentary Union (IPU) Assembly, said "I am highly impressed to see myself the remarkable socio-economic development made by Bangladesh since my first visit to Bangladesh a decade ago". However, Bangladesh official GDP growth rate in fiscal year 2015-2016 was 7.1 per cent while ADB projects 6.9 per cent GDP growth for this fiscal year 2016-2017.
The writer is a retired Professor of Economics, BCS General Education Cadre.