Asian Development Outlook 2015: Financing Asia's Future Growth

Abstract

[Excerpt] Developing Asia will grow at a steady 6.3% in 2015 and 2016—the same pace as 2014—supported by a strengthening recovery in the major industrial economies and soft global commodity prices. The drop in international oil prices is taking pressure off of consumer prices. Inflation will slow from 3.1% in 2014 to 2.6% this year. As oil prices gradually rebound, inflation will pick up to 3.0% in 2016. As low oil prices are supporting growth in developing Asia, a sudden sharp reversal could undermine the outlook and require policy response. Similarly, while capital inflows to the region have been beneficial for growth, policy makers must carefully manage credit expansion to ensure that it does not lead to excessive leverage and asset price bubbles. Developing Asia needs a deep, robust financial sector to sustain growth. Policy makers will be challenged to ensure that financial sector development is inclusive, providing broad access to households and firms. Financial stability must also be maintained to enhance growth and equity.