Due to slower growth in the People’s Republic of China (PRC), more aggressive monetary tightening in advanced economies, and the effects of Russia’s ongoing invasion of Ukraine, the Asian Development Bank (ADB) reduced its economic growth forecast for developing Asia and the Pacific to 4.6 percent this year.
The forecast contrasts with a 5.2 percent prediction made by ADB in April. In response to rising food and fuel prices, the bank also increased its projection for inflation in the area.
Developing Asia and the Pacific is continuing its recovery from the COVID-19 pandemic, according to ADB’s Asian Development Outlook (ADO) 2022 Supplement, released today. Many countries are easing mobility restrictions, which is strengthening economic activity. However, growth has slowed in the PRC, the region’s largest economy, due to disruption from new COVID-19 lockdowns, as well as weaker global demand.
“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, the 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.”
Compared to a previous prediction of 5.0 percent, the PRC’s GDP is expected to grow by 4.0 percent this year. In response to higher-than-expected inflation and monetary tightening, ADB also reduced its growth projection for India from 7.5 percent to 7.2 percent.
In emerging Asia and the Pacific, inflation is expected to increase to 4.2 percent this year from an earlier prediction of 3.7 percent. The region as a whole still has lower inflation pressure than other parts of the world, nevertheless.
ADB projected 5.2 percent economic growth for the area in 2023, down from 5.3 percent, while forecasting an increase in inflation to 3.5 percent from 3.1 percent.
Some subregions’ growth projections received an improvement. As a result of looser COVID-19 regulations, the prognosis for Southeast Asia was increased from 4.9 percent to 5.0 percent this year. Since several of the economies in the subregion have fared better than anticipated in absorbing the economic effects of Russia’s invasion of Ukraine, the prediction for the Caucasus and Central Asia was increased from 3.6 percent to 3.8 percent. The Pacific’s subregion’s growth outlook increased to 4.7 percent from 3.9 percent thanks to Fiji’s recovering tourism industry.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
