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U.N. Forecasts Moderate Growth for Asia-Pacific

UNITED NATIONS, Jan 15 2015 (IPS) - The Asia-Pacific region is expected to register a moderate increase in growth in 2015, according to the U.N. Economic and Social Commission for Asia and the Pacific (ESCAP).

The main factors shaping the outlook are structural reform programmes and lower oil prices. And prospects for 2015 will improve on these conditions.

The region’s developing countries are forecast to grow at an average of 5.8 per cent this year, up from 5.6 per cent in 2014, according to ESCAP’s Economic and Social Survey of Asia and the Pacific 2014: Year-end Update.

http://www.unescap.org/resources/economic-and-social-survey-asia-and-pacific-2014-year-end-update.

Structural reforms in India and Indonesia are projected to boost their growth to 6.4 and 5.6 per cent respectively, from the 2014 figures of 5.5 and 5.2 per cent respectively.

China’s growth is expected to be around 7 per cent in 2015, in line with the ongoing economic rebalancing.

Growth in the region remains inferior to pre-crisis levels, and a decrease in regional inflation to 3.5 in 2015 from 3.9 per cent in 2014 will allow some regional economies to loosen their monetary policies in support of growth.

The report was launched by U.N. Under-Secretary General and ESCAP Executive Secretary Shamshad Akhtar.

“Despite improved prospects many developing economies in the region face structural constraints which have kept them from realizing their growth potential. Infrastructure shortages remain acute and growth has not translated into enough decent jobs,” he was cited in a press release.

The U.S. economy will support growth in Asia-Pacific exporting economies, while the slow growth of the eurozone and Japan, and the moderate growth region of China, will present challenges.

ESCAP has underlined that Asia-Pacific should “brace for capital outflows following an expected raising of interest rates by the US Federal Reserve although this could be buffered to some extent by new financial injections by the eurozone and Japan.”

Thailand’s economy is forecast to see a 3.9 per cent increase as a result of heightened short-term consumer/investor confidence.

While domestic business environments are seen as positive, policy implications will be both positive and negative, according to ESCAP, which estimates that a $10 per barrel fall in the oil price in 2015 will increase GDP growth by up to 0.5 percentage points in energy-importing countries.

The recent fall in oil prices could set off a longer-trend, and the impact of the decline will have a varying impact across the region.

Russia’s growth could go down by 1.1 percentage points, which would deprive the Central Asian vicinity of $1.7 billion in remittances.

Declining global oil prices are a valuable opportunity for Asia-Pacific economies to scale back on fuel subsidies, which ESCAP estimates could free up significant shares of the budget, thus contributing, for instance, to universal access to health and education in Indonesia, Malaysia, Philippines, and Thailand.

“This is a particularly critical and opportune time to decrease subsidies,” said Akhtar.

“Reducing subsidies can raise significant public financial resources for productive investment in the region and could make needed funds available for financing sustainable development.”

 
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