Asian Development Outlook 2015: Financing Asia's Future Growth

To achieve the steady growth envisaged in this report, policy makers in developing Asia need to be vigilant of potential risks. Risks to Asia’s growth prospects could come from an unwieldy resolution of the Greek debt crisis, deepening recession in the Russian Federation, and possible capital outflows in response to the imminent rise in US interest rates. Falling oil prices have largely been a boon for the region’s outlook, supporting higher growth and low inflation. However, geopolitical tensions in the Middle East remain a real risk that could produce a sudden reversal of prices. Authorities need to be ready to deploy mitigating policy responses if any of these risks materialize. Asia has seen rapid credit growth in recent years as total domestic debt nearly doubled from $18 trillion in 2009 to $34 trillion in 2013, with private borrowing accounting for the bulk of new debt. Although debt remains at manageable levels, policy makers must carefully attend to credit growth to ensure the maintenance of sound financial systems that are efficient, well-regulated, and inclusive—and therefore able to help sustain regional growth momentum and stability, as well as foster greater equity.