China’s recovery from the pandemic and strong demand in India will drive strong economic growth in Asia this year, the Asian Development Bank (ADB) said in a report issued on Tuesday. Asia’s developing economies are on course for faster growth and moderating inflation this year and next, even as advanced economies are contributing to a darker global outlook, the report added.
The group’s 46 member nations across the continent are set to grow at 4.8% in 2023 and 2024, faster than the 4.2% last year, the ADB said in an update to its regional forecasts released Tuesday. Inflation should moderate to 4.2% this year in a slight easing from 4.4% in 2022.
China’s reopening looms large in the group’s projections, with the ADB seeing further knock-on effects to growth, including via boosts to tourist arrivals throughout the region. The world’s No. 2 economy also has had well-managed inflation given the lack of big stimulus packages and broadly balanced demand and supply, and the ADB analysts.
The ADB forecasts that China's economy will grow 5% this year and 4.5% next year, an improvement over last year's 3% growth but slower than its long-term average.
Inflation risks, though, are skewed to the higher side, the ADB analysts said — especially with the OPEC+ surprise announcement to slash production by one million barrels.
India's economy is expected to grow at a slower pace of 6.4% this year. That follows a 9.1% annual pace of expansion in 2021 as it rebounded from the worst of the pandemic, and 6.8% last year. But it's one of the fastest expansions for a major regional economy.
However, growing imports of Russian crude oil, especially by China and India, will likely cushion the impact of rising prices — such exports to China, India and Turkey more than doubled last year.
“We anticipated that supply would remain somewhat constrained this year,” given higher demand from China amid its rebound, said Albert Park, ADB chief economist. Having penciled in an oil-price average of $88 a barrel this year and $90 in 2024 before OPEC’s production cut, “it’s certainly plausible oil prices could go even higher,” he said. The report's analysis was based on the assumption that Brent crude oil, the pricing basis for international trading, would average $88 a barrel this year and $90 a barrel next year.
