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India fastest growing economy in Asia: ADB

 Led by India, South Asia will continue to be the fastest growing economic area despite new trade tensions in Asia and Pacific region, Asian Development Bank (ADB) said in a new report.

Growth in Asia and the Pacific's developing economies for 2018 and 2019 will remain solid as it continues apace across the region, despite rising tensions between the US and its trading partners, said a supplement to the Asian Development Outlook (ADO).

"South Asia, meanwhile, continues to be the fastest growing sub-region, led by India, whose economy is on track to meet fiscal year 2018 projected growth of 7.3 per cent and further accelerating to 7.6 per cent in 2019, as measures taken to strengthen the banking system and tax reform boost investment," it said.

The ADO published in April had said that India's economic growth will rise to 7.3 per cent this fiscal and further to 7.6 per cent in the next financial year, retaining the fastest-growing Asian economy tag, on back of GST and banking reforms.

"Although rising trade tensions remain a concern for the region, protectionist trade measures implemented so far in 2018 have not significantly dented buoyant trade flows to and from developing Asia," said ADB Chief Economist Yasuyuki Sawada.

"Prudent macroeconomic and fiscal policy-making will help economies across the region prepare to respond to external shocks, ensuring that growth in the region remains robust," he said. 

ADO has also retained the combined growth forecast for the major industrial economies -- the US, the Euro zone and Japan -- as growth in the US and the Euro area remains robust. 

In Japan, though, unanticipated contraction in the first quarter prompts slight revision of the 2018 growth forecast, it added. 

However, ADB said that the rise in protectionist trade measures from the US and countermeasures from China and other countries "poses a clear downside risk to the outlook for developing Asia". 
 

The ADO supplement has factored in the tariffs imposed by July 15. 

"The risk of further ratcheting up of protectionist measures could undermine consumer and business confidence and thus developing Asia's growth prospects," ADB said. 

 


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