By Karen Lema
MANILA (Reuters) – Developing Asia will grow faster than previously expected this year, helped by a stronger-than-expected rebound in China, But risks from turmoil in the global banking sector could weigh on the outlook, the Asian Development Bank (ADB) said on Tuesday. In its Asian Development Outlook report, the Asian Development Bank said it expects the Asia-Pacific region to grow by 4.8% in 2023, beating its previous estimate of 4.6% growth in December, following the 2021.
Driving the region’s growth this year is China’s recovery after ending its zero-COVID policy in December, with the world’s second-largest economy expected to grow by 5.0% this year, the ADB said. The growth rate was higher than its earlier estimate of 4.3%.
ADB’s chief economist said China’s reopening “will indeed provide the strongest support for growth in the region this year,” Albert Park told Reuters.
While China’s troubled property sector “remains a concern,” Park said the upside risks to China’s growth outlook outweigh the downside risks.
“If life does return to normal quickly and confidence returns, growth could even be higher than 5%, which is obviously better for the region,” Park said.
Excluding China, the region is forecast to grow 4.6% this year, down from 5.4% the year before.
By sub-region, South Asia is expected to post the fastest growth of 5.5% this year, driven by India’s projected growth of 6.4% this year, followed by Southeast Asia, which is expected to expand by 4.7% this year.
Despite the faster pace of growth in developing Asia, the ADB warned that challenges remained, including turmoil in the global banking sector and an escalation in the war in Ukraine, which could send commodity prices soaring.
But for now, the global banking turmoil sparked by the collapse of two mid-sized U.S. banks will not turn into a “larger crisis in the U.S. financial system,” Park said, despite urging policymakers to Those who remain vigilant.
Favorable for the region is an expected moderation in inflation, which would reduce the need for frequent and large rate hikes that could dampen consumption.
The ADB said inflation was expected to fall to 4.2% this year from 4.4% in 2022 and to 3.3% next year, but it warned that some core economic Overall inflation remains high and needs to be closely monitored.
At a separate media briefing, Parker said the surprise announcement of OPEC+ production cuts posed another challenge for the region as it could push prices higher. Currently, ADB predicts that the oil price will average $88 dollars per barrel this year and $88 dollars next year.
GDP growth 2021 2023 2023 2024 2023
DEC APR APR
Caucasus and 5.8 5.1 4.2 4.4 4.6
Central Asia
East Asia 7.9 2.8 4.0 4.6 4.2
China 8.4 3.0 4.3 5.0 4.5
South Asia 8.4 6.4 6.3 5.5 6.1
India 9.1 6.8 7.2 6.4 6.7
Southeast Asia 3.5 5.6 4.7 4.7 5.0
Indonesia 3.7 5.3 4.8 4.8 5.0
Malaysia 3.1 8.7 4.3 4.7 4.9
Myanmar -5.9 2.0 n/a 2.8 3.2
)
Philippines 5.7 7.6 6.0 6.0 6.2
Singapore 8.9 3.6 2.3 2.0 3.0
Thailand 1.5 2.6 4.0 3.3 3.7
Vietnam 2.6 8.0 6.3 6.5 6.8
Pacific-1.4 5.2 4.8 3.3 2.8
Developing Asia 7.2 4.2 4.6 4.8 4.8
Inflation
DEC APR APR
Central Asia 9.0 .9 8.5 .3 7.5
East Asia 1.1 2.3 2.4 2.3 2.0
China 0.9 2.0 2.3 2.2 2.0
South Asia 5.8 8.2 7.9 8.1 5.8
India 5.5 6.7 5.8 5.0 4.5
Southeast Asia 2.0 5.0 4.5 4.4 3.3
Indonesia 1.6 4.2 5.0 4.2 3.0
Malaysia 2.5 3.4 3.0 3.1 2.8
Myanmar 3.6 16.0 n/a .5 8.2
Philippines 3.9 5.8 4.3 6.2 4.0
Singapore 2.3 6.1 5.5 5.0 2.0
Thailand 1.2 6.1 2.7 2.9 2.3
Vietnam 1.8 3.2 4.5 4.5 4.2
Pacific 3.1 5.7 5.0 5.0 4.4
)
Developing Asia 2.6 4.4 4.2 4.2 3.3
