Asia-Pacific developing economies forecast to grow faster in '23: ADB

Economies in Asia and the Pacific are projected to grow 4.8 per cent this year and next year, improving on the 4.2 per cent growth rate in 2022, as per the Asian Development Outlook (ADO) April 2023.

Excluding China, developing Asia is expected to grow 4.6 per cent this year and 5.1 per cent in 2024. The region’s inflation, meanwhile, is forecast to moderate gradually toward pre-pandemic levels, though there is considerable variation across economies.

Improved consumption and investment are boosting recovery in many regional economies, offsetting the impacts of elevated energy prices caused by the Russian invasion of Ukraine and other global headwinds.

Risks to the outlook persist, however. A protracted or escalated Russian invasion of Ukraine could stoke renewed spikes global inflation and induce further monetary tightening. Tighter global financial conditions, combined with the increase in debt over the past decade and during the pandemic, have elevated financial stability risks. These risks must be carefully monitored and proactively addressed.

With the lifting of the zero-COVID strategy in December last year, the Chinese economy is expected to grow 5 per cent this year and 4.5 per cent in 2024, compared with 3 per cent growth in 2022. India, meanwhile, is forecast to expand by 6.4 per cent this year and 6.7 per cent next year, due to healthy domestic demand.

Robust domestic demand is boosting Southeast Asian economies like Indonesia, the Philippines, and Viet Nam, with the subregion projected to grow by 4.7 per cent this year and 5 per cent in 2024. Economies in the Caucasus and Central Asia can also expect steady growth, with the subregion forecast to expand by 4.4 per cent this year and 4.6 per cent in 2024. Continued reopening is supporting growth in the Pacific, with expansion likely to reach 3.3 per cent this year before moderating to 2.8 per cent in 2024.

Regional inflation will decelerate to 4.2 per cent in 2023 and 3.3 per cent in 2024 after reaching 4.4 per cent last year. Fading supply chain pressures and tighter monetary conditions are expected to shape developing Asia’s inflation outlook, according to ADO April 2023.

“Prospects for economies in Asia and the Pacific are brighter, and they’re poised for a strong recovery as we return to normalisation following the pandemic,” said ADB chief economist Albert Park. “Economic activities are gathering pace. Because many challenges remain, governments in the region need to stay focused on policies that support stronger cooperation and integration to promote trade, investment, productivity, and resilience.”

Fibre2Fashion News Desk (DP)