The Asian Development Bank (ADB) has lowered its economic growth forecast for developing Asia and the Pacific to 4.6 per cent this year due to slower expansion in China, more aggressive monetary tightening in advanced economies, and fallout from the continued Russian invasion of Ukraine. The outlook compares with a projection of 5.2 per cent issued by ADB in April.
The bank also raised its forecast for inflation in the region, amid higher prices for food and fuel.
Asian Development Bank has lowered its economic growth forecast for developing Asia and the Pacific to 4.6 per cent this year due to slower expansion in China, more aggressive monetary tightening in advanced economies, and fallout from the continued Russian invasion of Ukraine. The outlook compares with a projection of 5.2 per cent issued by ADB in April.
Developing Asia and the Pacific is continuing its recovery from the COVID-19 pandemic, according to ADB’s Asian Development Outlook (ADO) 2022 Supplement. Many countries are easing mobility restrictions, which is strengthening economic activity. However, growth has slowed in China, the region’s largest economy, due to disruption from new COVID-19 lockdowns, as well as weaker global demand.
China’s economy is poised to expand 4 per cent this year, compared with an earlier forecast of 5 per cent. ADB also lowered its growth outlook for India to 7.2 per cent from 7.5 per cent amid higher-than-expected inflation and monetary tightening.
Inflation in developing Asia and the Pacific is predicted to accelerate to 4.2 per cent this year, compared with a previous forecast of 3.7 per cent. However, inflation pressure in the region is still lower than elsewhere in the world.
For 2023, ADB has lowered its economic growth projection for the region to 5.2 per cent from 5.3 per cent, while raising the inflation forecast to 3.5 per cent from 3.1 per cent.
Growth forecasts for some subregions were upgraded. The outlook for Southeast Asia was raised to 5 per cent this year from 4.9 per cent amid increased domestic demand due to more relaxed COVID-19 restrictions. The forecast for the Caucasus and Central Asia was raised to 3.8 per cent from 3.6 per cent as some economies in the subregion have withstood the economic fallout from Russia’s invasion of Ukraine better than expected. In the Pacific, rebounding tourism in Fiji helped the subregion’s growth outlook improve to 4.7 per cent from 3.9 per cent.
“The economic impact of the pandemic has declined across most of Asia, but we’re far from a full and sustainable recovery,” said ADB chief economist Albert Park. “On top of the slowdown in the PRC, fallout from the war in Ukraine has added to inflationary pressure that’s causing central banks around the world to raise interest rates, acting as a brake on growth. It’s crucial to address all these global uncertainties, which continue to pose risks to the region’s recovery.”
Fibre2Fashion News Desk (KD)