ADB Maintains Indonesia's Growth Forecast, Expects Tamer Inflation

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However, the ADB trimmed its growth forecast for South Asia to 6.7% this year and 7.0% next year, compared with estimates of 7.0% and 7.2% made in July.

The Asian Development Bank raised its growth forecast Tuesday for Asia's developing economies because global trade and conditions in the world's biggest economies are improving more than expected.

"The PRC economy remains resilient, solidifying its role as an engine of global growth", said Yasuyuki Sawada, ADB Chief Economist.

"Countries in developing Asia should take advantage of favourable short-term economic prospects to implement productivity-enhancing reforms, invest in badly needed infrastructure, and maintain sound macroeconomic management to help increase their long-term growth potential", he added. The region's exports and imports expanded by double-digit rates in dollar terms for the first five months of the year, it said.

Developing Asia is expected to grow by 5.9% and 5.8% in 2017 and 2018, respectively, the Manila-based lender said.

China's growth outlook was also kept the same at six-point-seven and six-point-four percent.

The bank upped its forecast for China to 6.7% in 2017, from the previously estimated 6.5%. Likewise, the forecast for FY2018 was adjusted down to 7.4% from 7.6%.

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It expects the good news to last into 2018, for which it increased the region's growth forecast to 5.8% from 5.7%.

In economies like Indonesia, Malaysia, Thailand, and Taiwan, there is room for accomodative policy, the ADB said.

Risks to the region have become more balanced.

But 6.7 per cent growth for the full year would still indicate a notable slowing over the second half of the year.

Now, factors such as the Federal Reserve's plan to raise US interest rates remain a risk by drawing money out of the region and putting pressure on banks and companies in Asia with high debt levels.

"Because long-term interest rates in many Asian economies are closely linked to those in the United States, policymakers need to strengthen their financial positions further and monitor debt levels and asset prices", the ADB said.

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