Rate hikes, Ukraine war, China woes darken Asia economic outlook, says ADB
The Asian Development Bank (ADB) on Wednesday further slashed its growth forecasts for developing Asia for 2022 and 2023 amid mounting risks from increased central bank tightening, the fallout from the war in Ukraine and Covid-19 lockdowns in China.
The ADB now expects the bloc's combined economy, which includes China and India, to grow 4.3% this year, after previously trimming the forecast to 4.6% in July from 5.2% in April. By 2023, the ADB expects the region's economy to expand 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.
"Growth in developing Asia is expected to weaken. GDP growth forecast for the region is revised downward," ADB Chief Economist Albert Park said during a virtual briefing on Tuesday (September 20), as he warned a significant global economic downturn would severely undermine demand for the region's exports.
China's economy will likely expand by 3.3% this year, further cutting the growth forecast after trimming it to 4.0% from 5.0% in April. The ADB expects the world's second-largest economy to grow 4.5% next year, slower than the previous estimate of 4.8%.
The outlook for the sub-regions this year remained mixed, with Southeast 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 Manila-based lender at the same time raised its inflation forecasts in the region, as supply disruptions continue to underpin 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. By 2023, inflation is seen hitting 4.0%, compared with projections of 3.1% in April and 3.5% in July.
