ADB maintains growth forecast for Asia and the Pacific

Photo: ADB

Inflation is expected to continue falling, approaching pre-pandemic levels as fuel and food prices decline, according to the Asian Development Outlook (ADO) July 2023, released today. Inflation in developing Asia is forecast at 3.6% this year, compared with an April forecast of 4.2%. The inflation outlook for 2024, meanwhile, is raised to 3.4% from an earlier estimate of 3.3%.

The reopening of the People’s Republic of China (PRC) is bolstering the region’s growth. The PRC’s economy is projected to expand 5.0% this year, unchanged from the April forecast, amid strong domestic demand in the services sector. However, demand for developing Asia’s exports of electronics and other manufactured goods is slowing, as monetary tightening drags on economic activity in major advanced economies. The region’s growth forecast for next year is marginally revised down to 4.7% from a 4.8% estimate in April.

“Asia and the Pacific continues to recover from the pandemic at a steady pace,” said ADB Chief Economist Albert Park. “Domestic demand and services activity are driving growth, while many economies are also benefiting from a strong recovery in tourism. However, industrial activity and exports remain weak, and the outlook for global growth and demand next year has worsened.”

ADB is maintaining its growth forecasts for most subregions in Asia and the Pacific. Exceptions include Southeast Asia, where the outlook is lowered to 4.6% this year and 4.9% next year, compared with April estimates of 4.7% and 5.0%, respectively. The forecast for Caucasus and Central Asia is revised down marginally to 4.3% from 4.4% for 2023, and to 4.4% from 4.6% in 2024.

ADB also revised its growth forecast for Viet Nam down from 6.5% to 5.8% in 2023, and from 6.8% to 6.2% in 2024. Weak external demand continued to put pressure on manufacturing and industrial production, while domestic conditions are expected to improve. Inflation is forecast to slow to 4.0% in 2023 and 2024./.