The Asian Development Bank cut its economic growth forecast for China and also lowered its outlook for developing Asia amid rising interest rates, a prolonged war in Ukraine and Beijing’s "COVID-zero" policy.
The region is seen expanding 4.3% this year, according to the bank’s Asian Development Outlook Update released Wednesday, compared with a 4.6% projection in July. Growth in China, the largest economy in Asia, is expected to be slower at 3.3% against a 4% expansion seen previously.
Sporadic COVID-19 outbreaks and new lockdowns have weakened China’s growth, which the ADB said will be slower than the rest of developing Asia for the first time in more than three decades. Excluding China, the rest of developing Asia is forecast to expand 5.3% this year.
"Developing Asia continues to recover, but risks loom large,” ADB Chief Economist Albert Park said. A significant global downturn would undermine exports, while stronger-than-expected monetary tightening in advanced economies could stoke financial instability, he said.
This year’s growth forecast for India was cut to 7% from 7.2%, due to inflation and monetary tightening. Robust domestic demand in Indonesia and the Philippines are contributing to Southeast Asia’s improved outlook of 5.1% expansion.
While inflation in the region is lower than elsewhere, supply disruptions continue to fan food and fuel prices. "Governments in developing Asia need to remain vigilant against these risks and take the necessary steps to contain inflation without derailing growth,” Park said.
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