[Excerpt] Developing Asia will grow at a steady 6.3% in 2015 and 2016—the same pace as 2014—supported by a strengthening recovery in the major industrial economies and soft global commodity prices.
The drop in international oil prices is taking pressure off of consumer prices. Inﬂation will slow from 3.1% in 2014 to 2.6% this year. As oil prices gradually rebound, inﬂation will pick up to 3.0% in 2016.
As low oil prices are supporting growth in developing Asia, a sudden sharp reversal could undermine the outlook and require policy response. Similarly, while capital inﬂows to the region have been beneﬁcial for growth, policy makers must carefully manage credit expansion to ensure that it does not lead to excessive leverage and asset price bubbles.
Developing Asia needs a deep, robust ﬁnancial sector to sustain growth. Policy makers will be challenged to ensure that ﬁnancial sector development is inclusive, providing broad access to households and ﬁrms. Financial stability must also be maintained to enhance growth and equity.