Asia set for strong growth despite Ukraine risks: ADB

Manila-based bank forecasts region’s developing economies to grow 5.2 percent in 2022 and 5.3 percent in 2023.

Asian Development bank headquarters
The Asian Development Bank expects developing economies in the region to grow 5.2 percent in 2022 and 5.3 percent in 2023 [File: Cheryl Ravelo /Reuters]

Asia’s developing economies are expected to grow 5.2 percent in 2022 and 5.3 percent in 2023 on the back of a strong recovery in domestic demand and exports, the Asian Development Bank said on Wednesday.

By subregion, East Asia, South Asia and Southeast Asia are all expected to return to pre-pandemic rates of economic growth.

East Asia is on course for expansions of 4.7 and 4.5 percent, respectively, in 2022 and 2023. Southeast Asia is expected to hit 4.9 percent growth this year and 5.2 percent the year after. In South Asia, economies are forecast to grow 7.0 percent and 7.4 percent over the same period.

Pacific Island economies, which were hit hard by the collapse of tourism during the pandemic, are forecast to grow 3.9 percent this year and 5.4 percent in 2023, after a 0.6 percent contraction in 2021.

The region’s strong economic outlook, however, faces risks, including Russia’s invasion of Ukraine, resurging cases of COVID-19, and interest rate hikes in the United States, according to the Asian Development Outlook 2022 report.

‘Geopolitical uncertainty’

“Economies in developing Asia are starting to find their footing as they slowly emerge from the worst of the COVID-19 pandemic,” said ADB Chief Economist Albert Park.

“However, geopolitical uncertainty and new COVID-19 outbreaks and virus variants could derail this momentum. Governments in the region will need to remain vigilant and prepared to take steps to counter these risks. That includes making sure as many people as possible are fully vaccinated against COVID-19. Monetary authorities should also continue to monitor their inflation situation closely and not fall behind the curve.”

The development bank highlighted the war in Ukraine as the most serious risk for the region, although it said the direct fallout of the conflict would be limited outside of Central Asia and Mongolia.

Among the region’s major economies, China is forecast to grow 5.0 percent this year and 4.8 percent in 2023, according to the ABD forecast. The world’s second-largest economy reported growth of 8.1 percent in 2021.

India is expected to hit 7.5 percent growth this year and 8.0 percent in 2023.

In Southeast Asia, Vietnam is on track for the most robust performance, with expected growth rates of 6.5 percent and 6.7 percent, followed by the Philippines, Malaysia and Cambodia.

Inflation in the region, although “manageable,” is forecast to rise to 3.7 percent this year before slipping to 3.1 percent in 2023, the development bank said.

Source: Al Jazeera