The Asian Development Bank (ADB) has projected 7.5% growth rate in South Asia in 2006.

In its Asian Development Outlook (ADO) 2006 Update, the ADB said the new projection of 7.5% is up from 7.3% forecast in April.

ADO Update is a supplement to ADB’s annual flagship publication, Asian Development Outlook 2006, which was published in April and forecasts economic trends in the region.

Increasingly vibrant manufacturing activities in Bangladesh, India, and Pakistan are lifting exports, which contributed to some upgrading of growth estimates in 2006, the report said, adding, “In Nepal, the restoration of Parliament and a broadened political process have improved the economic situation and prospects.”

The report further said that since 2002, South Asian growth has averaged 7.7%, almost matching that of East Asia and two percentage points above growth in Southeast Asia.

ADO Update also raised growth estimates for Afghanistan and Sri Lanka despite continuing security issues.

The report further said developing Asia’s strong economic expansion is expected to continue, with growth projected at 7.7% in 2006 before easing to 7.1% in 2007, adding, “If PRC and India are removed from the calculation, the remaining countries of developing Asia are expected to grow by more modest averages: 5.5% in 2006 and 5.1% in 2007.”

The 7.7% growth forecast for 2006 represents a 0.5 percentage point increase from the April forecast. The upward revision significantly reflects accelerated growth in the PRC due to booming investments and exports.

“Developing Asia’s rapid growth is underpinned by strong performances by the PRC and India, which together account for more than 50% of regional GDP,” a press statement issued by ADB quoted Chief Economist of ADB Ifzal Ali as saying.