The economies of developing Asia are currently experiencing a resurgence, with a projected growth of 5.2% in the year 2022 and 5.3% in 2023. This promising outlook is primarily driven by a robust recovery in domestic demand and the continued expansion in exports. However, there are potential risks to this economic growth, such as the ongoing Russian invasion of Ukraine, the persistent COVID-19 pandemic, and the tightening measures by the United States Federal Reserve. This article examines the current state of Asian economies and explores their future prospects amidst these uncertainties.

Economic Growth across Asian Subregions

South Asia and East Asia

Many subregions within developing Asia, including South Asia and East Asia, are projected to return to their pre-pandemic economic growth rates. According to the Asian Development Outlook (ADO) 2022 released by the Asian Development Bank (ADB), the inflation rate in these regions remains manageable, with a predicted increase to 3.7% in 2022 before moderating to 3.1% in 2023.

Caucasus and Central Asia

The economies in the Caucasus and Central Asia are anticipated to grow by an average of 3.6% in 2022 and 4.0% in 2023. These regions include countries such as Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan.

Southeast Asia

Trade-dependent Southeast Asian economies are collectively expected to grow by 4.9% in 2022 and 5.2% in 2023. This group encompasses countries like Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand, Timor-Leste, and Vietnam.

Pacific Economies

Pacific economies, which are heavily reliant on tourism, are forecasted to grow 3.9% in 2022 and 5.4% in 2023, following a 0.6% contraction in 2021. These economies include Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu.

East Asia

East Asia, which comprises Hong Kong, China, Mongolia, People’s Republic of China, Republic of Korea, and Taipei, China, is expected to witness economic growth of 4.7% in 2022 and 4.5% in 2023. The People’s Republic of China, the largest economy in the region, is projected to grow 5.0% in 2022 and 4.8% in 2023, primarily fueled by strong export performance.

South Asia

South Asian economies, including Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, are projected to collectively expand by 7.0% in 2022 and 7.4% in 2023. India, the largest economy in the subregion, is expected to grow 7.5% in the current fiscal year and 8.0% in the next fiscal year.

Factors Contributing to Economic Growth

Recovery in Domestic Demand

The recovery of domestic demand plays a significant role in the overall growth of Asian economies. As countries gradually emerge from the worst effects of the COVID-19 pandemic, the easing of restrictions and the progress in vaccination campaigns have led to an increase in consumer confidence and spending.

Export Expansion

The expansion of exports has also fueled the growth of developing Asian economies in the past year. As global trade rebounds, the demand for goods and services from Asia has increased, contributing to the region’s economic growth.

Resilient Remittances

Remittances to developing Asian economies have remained resilient, particularly for countries that heavily rely on these incoming money transfers. Examples include Bangladesh, Kyrgyz Republic, Pakistan, and Tajikistan.

Reopening of International Tourism

The gradual reopening of international tourism has positively impacted economies that depend on this industry, such as Maldives, Sri Lanka, and some Pacific economies. An increase in tourist arrivals has led to a boost in economic activity in these countries.

Uncertainties and Risks to Economic Growth

Russian Invasion of Ukraine

The Russian invasion of Ukraine poses the most severe risk to the economic outlook of developing Asia. The conflict has already affected regional economies through sharp price increases in commodities like oil and heightened instability in global financial markets.

COVID-19 Pandemic

The ongoing COVID-19 pandemic continues to impact many parts of developing Asia, with some economies experiencing new surges in cases. The emergence of new virus variants poses a threat to the region’s economic recovery.

Recommendations for Mitigating Risks

To counter the risks and uncertainties surrounding the growth of Asian economies, ADB Chief Economist Albert Park suggests that governments in the region should remain vigilant and prepared to take necessary steps. These include ensuring widespread vaccination against COVID-19 and closely monitoring the inflation situation to prevent falling behind the curve.

Addressing Learning Losses from School Closures

The ADO 2022 report also highlights the learning losses caused by school closures due to the COVID-19 pandemic. These learning losses have disproportionately affected girls and students from poor households, reducing their future earnings potential and increasing inequality. As a response, the Asian Development Bank emphasizes the importance of addressing these learning losses to ensure a more equitable and sustainable future for the region.

Conclusion

Developing Asian economies are witnessing promising growth prospects due to the recovery of domestic demand, expansion of exports, resilient remittances, and the reopening of international tourism. However, uncertainties and risks, such as the Russian invasion of Ukraine and the ongoing COVID-19 pandemic, pose challenges to the region’s economic outlook. By remaining vigilant, adopting necessary measures, and addressing the learning losses caused by the pandemic, Asian economies can continue to grow and prosper in the face of these challenges.