“The surging economies of Southeast Asia have been a bright spot in developing Asia’s otherwise subdued 2012 growth performance, but the broader region should still pick up steam in 2013,” the ADB said in its latest Asian Development Outlook Supplement.
The lender highlighted the role played by the Philippines and Malaysia, where growth “outstripped expectations,” possibly allowing the Asean-5 - which also includes Indonesia, Singapore and Thailand - to grow nearly 6 percent this year, up from an earlier ADB forecast of 5.6 percent for the five-nation group.
“This performance and the recovery in [the People’s Republic of China] - supported by a turnaround in industrial production and retail sales and solid fixed investment - are helping to offset weakness in other East Asian economies, including Hong Kong, China; the Republic of Korea; and Taipei,China,” the lender said.
Elsewhere in developing Asia, growth “remains sluggish,” the ADB said, citing India, where industrial production and exports have slumped, and Central Asia, where the two biggest economies – Azerbaijan and Kazakhstan – are pulling down the rest of the sub-region.
In the Philippines, the Bangko Sentral ng Pilipinas is confident that inflation will remain manageable through next year after consumer prices averaged 3.1 percent in the first 11 months of this year, or at the low end of the central bank’s full-year target range of 3-5 percent.
The ADB however said the slowdown in the US and EU remains a risk for developing Asia.
“Enduring debt problems and economic weakness in Europe and the looming fiscal cliff in the United States remain very real threats to developing Asia next year,” said ADB chief economist Changyong Rhee.
Foreign investors have been pulling out of the US and EU, flooding into emerging markets like the Philippines where above-average growth provides higher returns.
Foreign portfolio investment flows into the country hit $1.5 billion in October, 68 percent more than in the same month last year and 1.7 percent higher than last September.
The surge in portfolio funds has fueled the appreciation of the peso to four-year highs, eroding the earnings of exporters and overseas Filipino workers. Meanwhile, the stock market has rewritten record highs 35 times so far this year, making the Philippine Stock Exchange index Asia's best-performer.
Earlier, Felipe Medalla, a member of the BSP’s policy-making Monetary Board, said the central bank is contemplating on capital controls in the form of a longer holding period for so-called “hot money” flows.
Hot money – unlike foreign direct investment - doesn’t create jobs and ends up inflating asset prices, which if left unchecked could lead to a sharp economic slowdown and job losses as witnessed during the Asian financial crisis of the late 1990s.
Original article here: http://www.interaksyon.com/business/49864/asias-new-pillar-adb-cites-philippines-stellar-growth-for-helping-prop-up-region