Baku, Azerbaijan, Sept. 26
Trend:
The Asian Development Bank (ADB) in the updated annual economic report "Asia Development Review 2018" has raised the forecast of growth of Kazakhstan's economy to 3.7 percent from the 3.2 percent projected in April. Also, the economic growth forecast for 2019 has been revised from 3.5 percent to 3.9 percent, the ADB press service said in a statement.
The growth forecast for Central Asia for 2018 has been revised upwards by 0.1 points to 4.1 percent. According to the data of the ADB, in the first half of the year, the growth of oil prices and oil production accelerated growth in Kazakhstan.
"The updated growth forecast for Kazakhstan for 2018 has amounted to 3.7 percent, which is higher than the previous forecast of 3.2 percent. The economic growth forecast for next year has also been revised upwards to 3.9 percent from the 3.5 percent projected in spring. At the same time, the forecast for 2018 is now lower for Kyrgyzstan due to the slowdown in mining, for Turkmenistan in anticipation of fiscal tightening and for Uzbekistan with a protracted adaptation to the new exchange rate regime," the report says.
However, the economy of industrialized countries will grow by 2.3 percent in 2018 and by 2 percent in 2019. The key to economic growth in the US was consumer spending and job creation, and the steady level of domestic consumption and the rapid expansion of the service sector helped to ensure high economic performance in China in the first half of the year.
"The growth prospects for 2018 remain unchanged at 6.6 percent, but have been revised downwards to 6.3 percent for 2019, reflecting lower demand growth and worsening trade tensions. The reform of the supply side, supported by money-and-credit and fiscal measures, will help to ensure economic growth," the report says.
In 6 out of 10 countries in South-East Asia, the economic growth remains moderate and is expected to reach 5.1 percent in 2018, having decreased by 0.1 percentage points compared to the previous forecast. The economic growth for 2019 has been forecasted to reach 5.2 percent, in line with the April 2018 forecast.
The report notes that higher oil and natural gas prices, combined with increased exports and investment, have led to significant economic growth in Central Asia.
Meanwhile, the ADB believes, the greatest risk for further growth is associated with the violation of international production relations caused by the further escalation of tension in trade relations. The economic growth in the Pacific region will increase by just 1.1 percent, which is twice as little as the previous forecast, owing to the disruptions caused by the earthquake in Papua New Guinea and the public expenditure deficit in Timor-Leste.
The risks to the Asia-Pacific region, the ADB believes, include "financial turmoil which could arise if the US Federal Reserve System has to raise interest rates earlier than currently expected in order to prevent inflation."
"But the biggest risk is the impact of the escalation of trade conflicts on cross-border production networks, as the business ties are being broken, and the investment plans are being canceled. However some countries, particularly in South-East Asia, may achieve success in the medium term as the trade is being reoriented towards these countries, the indirect effects may reduce confidence and investment in the region," the ADB report says.
The Asian Development Bank also believes that the high domestic demand stimulates economic growth in the largest countries of the Asia-Pacific region, and the rising oil and gas prices contribute to economic growth of the countries which are exporting the energy resources such as Kazakhstan.
However, the new constraints create uncertainty about the future growth trajectory of the region's economy, and in addition to the increasing tensions in trade relations, the decline in global monetary liquidity could further exacerbate the prospects for economic growth in the coming year, the report says.