Asian economies can ride out the storm when the Federal Reserve finally begins ending years of easy money, with even those most at risk, India and Indonesia, holding enough currency reserves for rough times ahead, according to the Asian Development Bank.
The ADB reckoned the U.S. central bank would wait till early 2014 to slow its dollar printing presses, after the Fed surprised markets last month by leaving its $85 billion monthly bond buying program unchanged.
“We are anticipating that is something that would start early next year,” ADB assistant chief economist Joseph Zveglich told a news conference, adding that it was crucial that the Fed communicates its timeline for reducing the stimulus programme.
Updating forecasts for 2013 and 2014, the Manila-based lender said on Wednesday that growth in developing Asia is likely to be slower than it thought three months ago, when it last revised forecasts to an annual outlook released in April.
It now reckons the region, grouping 45 countries in Asia-Pacific, will grow 6.0 percent in 2013 and 6.2 percent in 2014, little changed from last year’s growth of 6.1 percent.
Between May and August, emerging markets were gripped by a sell-off after the Fed signaled that it would taper its bond-buying stimulus once the U.S. economy improved.
The sudden capital outflows caused some alarm, but ADB said worries over potential for a regional meltdown were misplaced.
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