The Asian Development Bank (ADB) yesterday cut its growth forecast for developing Asia for this year, with crippling COVID-19 lockdowns in China, conflict in Ukraine and efforts to combat inflation dragging on the region.
While easing COVID-19 pandemic restrictions had spurred consumer spending and investment in the region, the Philippines-based bank warned of “global headwinds” to the recovery as food and fuel prices soared, and central banks hiked interest rates.
As a result, the ADB slashed its growth forecast for developing Asia — which refers to the bank’s 46 members, stretching from the Cook Islands in the Pacific to Kazakhstan in central Asia — to 4.3 percent this year. That compares with its April forecast of 5.2 percent growth. The region grew by 7 percent last year.
ADB chief economist Albert Park said “risks loom large” for the region’s outlook and urged governments to remain “vigilant.”
“A significant downturn in the world economy would severely undermine demand for the region’s exports,” Park said.
“Stronger-than-expected monetary tightening in advanced economies could lead to financial instability. And growth in the PRC faces challenges from recurrent lockdowns and a weak property sector,” he said, referring to the People’s Republic of China.
China’s growth forecast for this year was reduced to 3.3 percent from 5 percent, as Beijing pursues a “zero COVID-19” strategy that has devastated the world’s second-largest economy.
Chinese officials are under pressure to curb even the smallest virus outbreaks swiftly, ahead of a key political meeting next month in which Chinese President Xi Jinping (習近平) is expected to secure an unprecedented third term.
Officials have imposed targeted lockdowns and travel restrictions, disrupting businesses and forcing millions of people to stay home.
Park said the slowdown was “weighing heavily” on the region’s projections.
Excluding China, developing Asia would grow 5.3 percent.
“For the first time in more than three decades, the rest of developing Asia will grow faster than’ China,” the ADB said.
The bank also raised its inflation forecast to 4.5 percent from 3.7 percent, as Russia’s invasion of Ukraine and supply chain disruptions drive up food and energy prices.
While monetary policymakers in the region have hiked interest rates, some central banks might need to do more to tame inflation and prevent capital outflows, it said.
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