The Asian Development Bank (ADB) has adjusted its economic growth projection for developing Asia and the Pacific, anticipating a slightly stronger performance this year. The new forecast stands at 5.0%, up from the previous estimate of 4.9%. Additionally, the growth outlook for the following year remains steady at 4.9%.

Factors Driving Growth

The region’s economic rebound owes much to a post-pandemic recovery fueled primarily by domestic demand. However, a notable contributor to this positive trend is the resurgence in exports. Robust global demand for electronics, particularly semiconductors used in high-tech and artificial intelligence applications, has bolstered exports across several Asian economies.

ADB Chief Economist Albert Park emphasized the region’s overall resilience: “Most of Asia and the Pacific are experiencing faster economic growth compared to the latter half of last year.” Despite these encouraging signs, policymakers must remain vigilant, considering potential risks. These include uncertainties tied to election outcomes in major economies, interest rate decisions, and geopolitical tensions.

Inflation Trends

The latest edition of the Asian Development Outlook (ADO) predicts a slowdown in inflation to 2.9% this year. This moderation results from easing global food prices and the lingering effects of higher interest rates. However, certain economies continue to grapple with elevated price pressures. Food inflation remains high in South Asia, Southeast Asia, and the Pacific, partly due to adverse weather conditions and food export restrictions.

Country-Specific Forecasts

• People’s Republic of China (PRC): The PRC, as the region’s largest economy, maintains its growth forecast at 4.8% for this year. Despite challenges in the property sector, services consumption and unexpectedly strong exports and industrial activity support expansion. Additional policy measures introduced in May aim to stabilize the property market.
• India: India, the fastest-growing economy in the region, sustains its outlook at 7.0% for fiscal year 2024. Robust growth in the industrial sector, driven by manufacturing and construction demand, contributes to this positive trajectory. Agricultural rebound, fueled by an above-normal monsoon, and strong investment demand further reinforce India’s economic prospects.
• Southeast Asia: The growth forecast for Southeast Asia remains steady at 4.6% this year. Improvements in both domestic and external demand contribute to this stability.
• Caucasus and Central Asia: The outlook for this region is revised upward to 4.5% from the previous projection of 4.3%. Stronger-than-expected growth in Azerbaijan and the Kyrgyz Republic plays a significant role.
• Pacific: In 2024, the Pacific region is expected to grow at 3.3%, driven by tourism and infrastructure spending. Papua New Guinea’s revived mining activity also contributes to this positive outlook.