ADB’s flagship annual publication, Asian Development Outlook 2008 (ADO) released today, forecasts developing Asian economies to expand at 7.6% in 2008 and 7.8% in 2009. The region posted its highest growth in almost two decades in 2007 – averaging 8.7%.

Growth in Central Asia is expected to decelerate sharply to 7.5% in 2008 from double digit levels in recent years on the back of weaker expansion in the region’s largest economy, Kazakhstan. A sudden halt of capital flows to Kazakh banks has triggered a reduction in lending and downturn in non-oil economy.

Uzbekistan should grow by around 7–8% in the forecast period. Healthy external demand and surging commodity prices, coupled with greater remittances and import controls, are expected to keep the current account surplus at 18.5% in 2008 and 17.5% in 2009.

The growth will be contributed by the world prices of gold, cotton, and gas that seem set to stay buoyant over the next couple of years. The Government of Uzbekistan plans to continue promoting development of the gold sector. The price of cotton is expected to keep on rising. For 2008, Uzbekistan once again negotiated substantial price rises for gas exports.

Apart from strong price incentives for increased commodity production, industry will remain a major contributor to growth through expanded automobile production, following General Motors’ investment in UzDaewooAuto.

Greater investment in communications and hydrocarbons, much by Russian and Asian companies, as well as government infrastructure spending, will maintain construction’s strong expansion.

All these factors will contribute to country’s growth, the ADB said in the annual report.