Rest of Asia set to grow faster than China for the first time in 30 years, says ADB
26 Sep 2022
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The Asian Development Bank (ADB) again lowered its forecasts for economic growth in developing Asia and the Pacific, amid mounting challenges that include increased monetary tightening by central banks, fallout from the protracted Russian invasion of Ukraine, and recurrent COVID-19 lockdowns in the People’s Republic of China (PRC).
ADB now expects the region’s economy to grow 4.3 per cent this year, compared with the ADB projection in April of a 5.2 per cent expansion. The Bank also lowered growth forecast for the next year to 4.9 per cent from 5.3 per cent, while raising the region’s inflation forecast. Excluding the PRC, ADB projects growth in the rest of developing Asia to be around 5.3 per cent in both 2022 and 2023.
ADB has slashed India's economic growth projection for 2022-23 by 0.2 per cent, in view of the rising inflation and the Reserve Bank of India’s monetary policies to curb it.
Earlier, the ADB had projected a growth of 7.2 per cent, which is now reduced to 7 percent. In a supplement report its flagship ADO report released on Wednesday, it was mentioned that the Indian economy recorded a 13.5 per cent year-on-year in the first quarter of 2022-23. The data reflected a promising strong growth in services.
"However, GDP growth is revised down from ADO 2022's forecasts to 7 per cent for FY2022 (ending in March 2023) and 7.2 per cent for FY2023 (ending in March 2024) as price pressures are expected to adversely impact domestic consumption, and sluggish global demand and elevated oil prices will likely be a drag on net exports," it said.
The People’s Republic of China remains the big exception because of its intermittent but stringent lockdowns to stamp out sporadic outbreaks, the Bank said.
ADB had in July, slashed its growth forecast for China to 4 per cent from 5 per cent, attributing that to sporadic lockdowns from the nation’s zero-Covid policy, problems in the property sector, and slowing economic activity in light of weaker external demand.
It also lowered its 2023 forecast for China’s economic growth to 4.5 per cent from April’s 4.8 per cent outlook on “deteriorating external demand continuing to dampen investment in manufacturing.”
This will be the first time in more than three decades that the rest of developing Asia will grow faster than China, the Manila-based lender said in its latest outlook report released on Wednesday.
“The last time was in 1990, when (China’s) growth slowed to 3.9 per cent while GDP in the rest of the region expanded by 6.9 per cent,” it said.
It may be noted that China's Premier Wen Jiabao has announced plans to slow growth in the world's fastest-growing major economy to approximately eight per cent this year by clamping down on urban infrastructure projects and spending more on lagging rural areas.
In contrast to that, “Easing pandemic restrictions, increasing immunisation, falling Covid-19 mortality rates, and the less severe health impact of the Omicron variant are underpinning improved mobility in much of the region,” it added in the report.
ADB also reduced the overall growth projections for Asia and the Pacific regions due to global challenges.
Asia’s developing economies may be showing signs of recovery, but the Asian Development Bank (ADB) cut its growth forecasts for them yet again — thanks to China’s prolonged zero-Covid policy.
Though the region is showing signs of continued recovery through revived tourism, global headwinds are slowing down overall growth, the ADB said.
The latest updates to the Asian Development Outlook also predicted that the pace of rising prices will accelerate even further to 4.5 per cent in 2022 and 4 per cent in 2023 — an upwards revision in July’s predictions of 4.2 per cent and 3.5 per cent, respectively, citing added inflationary pressures from food and energy costs.
“Regional central banks are raising their policy rates as inflation has now risen above pre-pandemic levels,” it said. “This is contributing to tighter financial conditions amid a dimming growth outlook and accelerated monetary tightening by the Fed.”
ADB pointed to several downside risks like a sharp deceleration in global growth, stronger-than-expected monetary policy tightening in advanced economies, the Russian invasion of Ukraine escalating, a deeper-than-expected deceleration in the People’s Republic of China (PRC), and negative pandemic developments could all dent developing Asia’s growth.
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