ADB Lowers Economic Growth Forecast for Developing Asia; maintains India GDP growth FY23 at 7%

• The developing AsiaThe economy will grow by 4.2 percent this year and 4.6 percent next year, ADB said.
• The Asian Development Bank (ADB) has downgraded its economic growth forecasts for the developing region of Asia due to the deteriorating global outlook.
• China’s growth is expected to slow to 3 percent in 2022, from 3.3 percent growth predicted in a September report.

The Manila-based bank maintained its gross domestic product growth forecasts for India against 7 percent this fiscal year and 7.2 percent next fiscal year. The bank also added that even with the downturn forecast, developing Asia will still outperform other regions globally in terms of both growth and inflation.

Asia’s emerging economy will grow 4.2 percent this year and 4.6 percent next year, ADB said in a regular supplement to the Asian development prospects (ADO) 2022, released on Wednesday. ADB estimated in September that the region’s economy would grow by 4.3 percent in 2022 and 4.9 percent in 2023.

Tightening monetary policy by global and regional central banks, the ongoing Russian invasion of Ukraine and recurring lockdowns in the People’s Republic of China (PRC) are slowing Asia’s recovery from the Covid-19 pandemic, ADB said.

Restrictions under the “zero Covid” approach, along with a struggling real estate market, have led to another downward revision of the PRC’s growth outlook.

“Asia and the Pacific will continue to recover, but deteriorating global conditions mean the region’s momentum is losing some momentum as we head into the new year,” said ADB Chief Economist Albert Park.

“Governments will need to work more closely together to address the ongoing challenges of Covid-19, combat the effects of high food and energy prices – especially on the poor and vulnerable – and ensure a sustainable, inclusive economic recovery.”

ADB lowered its forecast for inflation in emerging Asia-Pacific countries this year from 4.5 percent to 4.4 percent. However, the bank raised its projection for next year from 4.2 percent to 4.2 percent due to continued inflationary pressures from energy and food.

Growth in China, Asia’s largest economy, is expected to slow to 3 percent in 2022, from 3.3 percent growth predicted in a September report.

The forecast for next year was lowered from 4.5 percent to 4.3 percent, according to the bank, due to the global slowdown. Gross domestic product growth forecasts for India were maintained at 7 percent this fiscal year and 7.2 percent next fiscal year, according to the ADB.

Even with the downward forecasts, the ADB expects emerging Asia to still outperform other regions globally in terms of both growth and inflation. ADB’s growth forecast for South East Asia this year was increased from 5.1 percent to 5.5 percent, amid a robust recovery in consumption and tourism in Malaysia, the Philippines, Thailand and Vietnam.

However, forecasts for next year were cut from 5 percent to 4.7 percent due to declining global demand.

The growth forecast for the Caucasus and Central Asia this year was upgraded from 3.9 percent to 4.8 percent, while the projection for the Pacific was raised from 4.7 percent to 5.3 percent due to a strong recovery in tourism in Fiji.

ADO is published every year in April, with an update in September and short additions that normally appear in July and December. Develop Asia refers to the bank’s 46 development members.

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