The Asian Development Bank (ADB) has raised its economic forecast for developing economies in Asia and the Pacific, after robust domestic demand drove higher-than-expected growth in the People’s Republic of China (PRC) and India.
The regional economy is expected to grow 4.9 per cent this year, compared with a previous forecast of 4.7 per cent in September, according to the Asian Development Outlook (ADO) December 2023, released today. The outlook for next year is maintained at 4.8 per cent.
The PRC’s economy is projected to expand by 5.2 per cent this year, compared with a previous forecast of 4.9 per cent, after household consumption and public investment boosted growth in the third quarter. The growth outlook for India has been raised to 6.7 per cent from 6.3 per cent following faster-than-expected expansion in July-September, driven by double-digit growth in industry. The upgrades for the PRC and India more than offset a lowering of the forecast for Southeast Asia, caused by lackluster performance in the manufacturing sector.
“Developing Asia continues to grow at a robust pace, despite a challenging global environment,” said ADB Chief Economist Albert Park. “Inflation in the region is also gradually coming under control. Still, risks remain, from elevated global interest rates to climate events such as El Niño. Governments in Asia and the Pacific need to remain vigilant to ensure that their economies are resilient, and that growth is sustainable.”
The region’s inflation outlook for this year has been lowered to 3.5 per cent from an earlier projection of 3.6 per cent, according to ADO December 2023. For next year, inflation is expected to edge up to 3.6 per cent, compared with a previous forecast of 3.5 per cent.
The growth outlook for Southeast Asia this year has been lowered to 4.3 per cent from 4.6 per cent, amid weak demand for manufacturing exports. The outlook for economies in the Caucasus and Central Asia has been raised slightly, while projections for Pacific economies are unchanged.
Risks to the outlook include persistently elevated interest rates in the United States and other advanced economies, which could contribute to financial instability in vulnerable economies in the region, especially those with high debt. Potential supply disruptions caused by the El Niño weather pattern or the Russian invasion of Ukraine could also rekindle inflation, particularly regarding food and energy.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.