The Asian Development Bank’s most recent outlook report, released yesterday, cut its growth forecast for Asian countries in 2013 to six per cent, down from 6.6 per cent in April’s estimate.
However, the report also adds: “Fears of a repeat of the 1997 Asian financial crisis are unwarranted. The region is now in a stronger position to weather the storm.”
India’s projected growth rate this year was cut considerably by the bank, down from six per cent expected previously to 4.7 per cent now.
Growth predictions were only hiked for a handful of countries: Azerbaijan, the Philippines and Bangladesh were some of the few nations in which prospects appear rosier than they did in spring.
Similarly, a report from Legal & General’s emerging market strategist Brian Coulton, issued yesterday, suggests that the economies which suffered during 1990s crises now have far more robust defences against shocks.
Coulton said: “The majority of the largest emerging market economies do not face external funding challenges, and those that do are still mostly in much better shape than in the 1990s. The current volatility to date is very small in comparison to previous crisis episodes.”
The research attributes the relative resistance to a much stronger position, especially with improved external balances, much higher foreign currency reserves to act as a buffer against volatility. Coulton added that improving conditions in advanced economies should benefit exports from emerging markets.
Legal & General’s research highlighted Turkey as one emerging market which it believes may be threatened. The report says: “Policy interest rates have not risen, domestic demand growth is accelerating and external imbalances are among the largest in the sphere.”