Asia’s growth forecast for 2022 has been lowered to 4.3% by Asian Development Bank (ADB), compared to its earlier projection of 5.2% that was announced in April.
In its recent Asian Development Outlook 2022 Update report, the bank further added that Asia’s growth forecast for 2023 has also been lowered to 4.9%, against its prior projections of 5.3%.
According to ADB Macroeconomic Research Division director, Abdul Abiad, the revision was made due to several downside risks that are largely present. These include a sharp deceleration in global growth, stronger monetary tightening policies in advanced economies, the escalation of Russia’s invasion of Ukraine, a deeper-than-anticipated deceleration in China, and negative pandemic developments.
Speaking at the recent Asian Impact Webinar: Asian Development Outlook 2022 Update, he said that these variables could impact Developing Asia’s growth.
As economies in the region continue to loosen pandemic limitations due in part to vaccination campaigns and declining COVID-19 mortality, he stated that domestic consumer spending and investment are driving growth.
However, he added that the ongoing invasion of Ukraine has increased global insecurity, exacerbated supply disruptions, and upset energy and food markets.
Furthermore, the US Federal reserve and European Central Bank’s hawkish monetary tightening stance is also denting global demand and upsetting financial markets, he said.
Abdul suggests for the government in the region to remain attentive to these risks and take appropriate measures to reduce the inflation without further impeding economic progress.
For regional inflation, ADB also revised its forecast up from 3.7% to 4.5% this year and from 3.1% to 4.0% for 2023.
Despite staying lower than elsewhere in the world, he stated that pricing pressures in developing Asia are increasing due to greater energy and food costs
“Although global food prices have decreased in recent months, the ongoing conflict in Ukraine continues to drive up the price of imported energy in the region.
“While Developing Asia’s exports remained high in the first half of the year, they are gradually dropping, and a major recession in the global economy would have a devastating impact on demand,” he cautioned.
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