Multiple factors dim Asia’s growth outlook

Despite pressures, ADB expects economy to hit 4.3%

“More aggressive tightening by the US Federal Reserve and other central banks is denting global demand and rattling financial markets.” Albert Park

MANILA: The Asian Development Bank (ADB) yesterday cut its growth forecasts for developing Asia for 2022 and 2023, amid mounting risks from increased central bank monetary tightening, the fallout from the war in Ukraine and Covid-19 lockdowns in China.

The ADB now expects the region’s combined economy, which includes China and India, to grow by 4.3% this year, after previously trimming the forecast to 4.6% in July from 5.2% in April.

In 2023, the ADB expects the region’s economy to expand by 4.9%, slower than the April and July forecasts of 5.3% and 5.2%, respectively, it said in the September edition of its flagship Asian Development Outlook report.

“Since April, various headwinds have strengthened,” said ADB chief economist Albert Park. “More aggressive tightening by the US Federal Reserve and other central banks is denting global demand and rattling financial markets.”

A significant global economic downturn would severely undermine demand for the region’s exports, he warned.

China’s economy will likely expand by 3.3% this year, a further step down after previously trimming the forecast to 4% from 5% in April.

The ADB expects the world’s second-largest economy to grow 4.5% next year, slower than a previous estimate of 4.8%.

The outlook for the sub-regions this year remained mixed, with South-east Asia and Central Asia expected to grow faster than previously projected at 5.1% and 3.9%, respectively.

The ADB, however, kept its growth forecast for South Asia at 6.5%, despite a lower growth estimate for India and an economic crisis in Sri Lanka.

The regional lender has at the same time raised its inflation forecasts in the region, as supply disruptions continue to raise food and fuel prices.

Average inflation in developing Asia this year is now expected to hit 4.5%, up from April and July forecasts of 3.7% and 4.2%, respectively.

Inflation is seen hitting 4% in 2023, compared with projections of 3.1% in April and 3.5% in July.