Asian Development Bank (ADB) said Asia’ currency and equity markets are expected to strengthen as a result of interest rate cuts along with stronger foreign equity inflows as the recovery takes hold. India is still viewed as “the best performing major emerging economy in the coming years.
The lender also cited uncertainties stemming from US fiscal policy and a possible disorderly Brexit as risks to its outlook because they could slow growth in advanced economies and cloud the outlook for the world’s second-largest economy.
Beyond trade risks, the ADB said China’ growth will also be retrained by restrictions on shadow banking, which is expected to limit credit expansion even as fiscal stimulus provides some offset.
Citing stable commodity prices and Asian currencies depreciated, the ADB lowered its average inflation forecast for developing Asia to 2.5% this year from 2.7% previously, and it is expected to remain subdued at 2.5% in 2020.