The Asian Development Bank has released an update to its March 2009 Asian Development Outlook. The Bank notes that despite the economic performance of the G3 (US, Japan and euro area) turning out to be worse than was expected in March, developing Asia has proved more resilient than expected: the ADB is increasing its forecast for economic growth for the region by half a percentage point to 3.9% from 3.4%.
This change mainly reflects upgrades to 2009 growth projections for China (from 7% to 8.2%), India (from 5% to 6%) and Indonesia (from 3.6% to 4.3%), as well as a reduction in the forecast contraction for South Korea (from -3% to -2%). Growth projections for this year have been marked down for Malaysia, Thailand, the Philippines, Hong Kong and Taiwan.
Along with a greater than expected resilience to the downturn, the ADB thinks developing Asia will lead the rest of the world out of the Great Recession, with the 'regional economy now poised to achieve a V-shaped rebound'. It is boosting its regional growth forecast for 2010 from 6% to 6.4%, with the upgrade action virtually all concentrated on China, India, and Indonesia. However, the ADB is also warning that significant downside risks remain, and that attaining full potential growth remains dependent on a revival elsewhere in the world economy.
It's worth pointing out that this pattern of relative upgrades and downgrades across the region, and in particular the outperformance by China, India and Indonesia, mirrors quite nicely the 'big is beautiful' thesis I posted on earlier this year, with the fiscal and monetary stimulus applied across the region having most traction in those economies relatively less exposed to international trade and with larger domestic markets.
Photo by Flickr user photoholic1, used under a Creative Commons license.