Asia’s economy grows less strongly

The Asian Development Bank (ADB) reduced its economic growth forecasts for developing countries in Asia and the Pacific, amid worsening global prospects, according to its outlook report.

GDP growth forecast

Albert Park, ADB’s chief economist, said “Asia and the Pacific will continue to recover, but worsening global conditions mean the region’s momentum is losing steam as we head into the new year.”

The region’s economy will grow 4.2% this year and 4.6% next year, the agency said, lowering the estimates it had delivered in September, of 4.3% growth for this year.

Source: Asian Development Bank. Asian Development Outlook Supplement, December 2022

Monetary policy tightening by central banks globally and in the region, the protracted Russian invasion of Ukraine and recurring lockdowns in the PRC slow down recovery from the COVID-19 pandemic for developing Asia, according to the ADB.

Restrictions under the “covid zero” approach, coupled with a struggling housing market, have led to another downgrade of China’s growth outlook.

Inflation in developing Asia

China’s economy is forecast to expand by 3 per cent this year, compared with a previous projection of 3.3 per cent. The forecast for next year was lowered to 4.3% from 4.5%, due to the global slowdown.

Gross domestic product growth projections for India stood at 7 per cent this fiscal year and 7.2 per cent next.

Many countries in the region have relaxed mobility restrictions, which strengthens economic activity.

Source: Asian Development Bank. Asian Development Outlook Supplement, December 2022

The ADB lowered its forecast for inflation in developing Asia and the Pacific this year to 4.4% from 4.5%. However, it raised its projection for 2022 from 4.0% to 4.2%, due to persistent inflationary pressures from energy and food.

Even with the lowered forecasts, developing Asia (46 nations, excluding Australia, Japan and New Zealand) will continue to outperform other regions of the world, both in terms of growth and inflation.

The ADB growth forecast for Southeast Asia this year was raised to 5.5% from 5.1% amid a strong recovery in consumption and tourism in Malaysia, the Philippines, Thailand and Vietnam.

However, projections for next year were lowered from 5.0% to 4.7% due to weakening global demand.

The growth forecast for the Caucasus and Central Asia this year was updated to 4.8% from 3.9%, while the projection for the Pacific Islands was raised to 5.3% from 4.7%, due to a strong recovery of tourism in Fiji.

Park said that in the coming months “governments will need to work together more closely to overcome the persistent challenges of covid-19, combat the effects of high food and energy prices, especially among the poor and vulnerable, and ensure a sustainable and inclusive economic recovery”.

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