MercoPress. South Atlantic News Agency

China and India trample over growth forecasts

The Chinese and Indian economies are likely to grow even faster than previously thought this year, according to the Asian Development Bank (ADB).

The new estimate for China stands at 10.4% as against the original 9.5%. Indian GDP is expected to reach 7.8%, up from 7.6% anticipated last April.

In its latest update on the region's economy, the ADB said China and India would bolster developing Asia's growth as a whole in 2006, forecasts for which it has revised upwards from 7.2% to 7.7%. For 2007 ADB is forecasting growth across the region of 7.1%, compared with the 7% outlined in April.

But ADB warned that countries in the region needed to adjust more quickly to high oil prices and do more to stimulate investment.

The Chinese economy grew by 10.9% in the first half of 2006 against the same period a year ago, surprising many observers by its continued red-hot performance. Beijing has tried to cool the pace of growth by slowing public spending and limiting the availability of bank credit. However, private sector investment has continued unabated while exports remain buoyant.

ADB has also significantly raised its 2007 economic forecast for China, now expecting growth of 9.5%, compared with its earlier prediction of 8.8%. "Developing Asia's rapid growth is underpinned by strong performances by China and India" said Ifzal Ali, ADB's chief economist.

"The outlook for Asian growth is quite positive as both domestic and external conditions remain favourable."

Elsewhere in the region ADB said Pakistan and Bangladesh are expected to grow faster than first forecast due to healthy exports, and it also raised its growth estimates for Singapore, Sri Lanka, the Philippines and Afghanistan. However regarding Thailand political uncertainty ahead of expected elections next month had caused it to downgrade its forecasts.

For 2007, the ADB is now forecasting growth across the region of 7.1%, compared with the 7% outlined in April.