Asian Development Bank upgrades 2023 growth outlook for developing Asia amid robust domestic demand

The Asian Development Bank (ADB) has revised its economic projections for developing economies in Asia and the Pacific, citing strong domestic demand that propelled higher-than-anticipated growth in China and India.

According to the Asian Development Outlook (ADO) December 2023, released on December 13, the regional economy is now expected to grow by 4.9 per cent in 2023, up from the earlier forecast of 4.7 per cent in September, with the outlook for the following year remaining steady at 4.8 per cent.

The People's Republic of China (PRC) stands out in the upgraded forecasts, with its economy projected to expand by 5.2 per cent in 2023, surpassing the previous estimate of 4.9 per cent.

The boost is attributed to robust growth in household consumption and public investment during the third quarter.

India also experienced an upward revision, with its growth outlook raised to 6.7 per cent from 6.3 per cent, driven by double-digit expansion in the industrial sector during July-September.

However, Southeast Asia witnessed a slight downturn, as the growth outlook for the region was adjusted to 4.3 per cent from the initial projection of 4.6 per cent, primarily due to lacklustre performance in the manufacturing sector.

The Caucasus and Central Asia saw a modest uptick in their economic outlook, while projections for Pacific economies remained unchanged.

ADB Chief Economist Albert Park expressed optimism despite the challenging global environment, highlighting the region's resilience and robust growth.

Park said, "Developing Asia continues to grow at a robust pace, despite a challenging global environment. Inflation in the region is also gradually coming under control. Still, risks remain, from elevated global interest rates to climate events such as El Nino. Governments in Asia and the Pacific need to remain vigilant to ensure that their economies are resilient and that growth is sustainable."

Park emphasized the need for governments in Asia and the Pacific to remain vigilant in ensuring economic resilience and sustainable growth, especially in light of potential risks such as elevated global interest rates and climate events like El Nino.

The inflation outlook for the region in 2023 has been revised down to 3.5 per cent from the previous estimate of 3.6 per cent.

Looking ahead to 2024, ADO anticipates a marginal uptick in inflation to 3.6 per cent, compared to the earlier forecast of 3.5 per cent.

Key risks to the economic outlook include persistently high-interest rates in advanced economies, particularly the United States, posing potential threats to financial stability in vulnerable regional economies with high debt levels.

Additionally, concerns about supply disruptions due to the El Nino weather pattern or geopolitical events, such as the Russian invasion of Ukraine, could reignite inflationary pressures, especially in the food and energy sectors.

The ADB remains committed to its goal of achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while continuing efforts to eradicate extreme poverty.