Chinese workers work at a construction site at sunset in Chongqing, China.
Asia’s developing economies may be showing signs of recovery, but the Asian Development Bank (ADB) has lowered its growth forecast for them once again – thanks to China’s protracted policy of not spreading the Covid virus.
But this will be the first time in more than three decades that the rest of developing Asia will grow faster than China, the Manila-based bank said in its latest forecast report released on Wednesday.
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“The last time was in 1990, When growth (China) slowed to 3.9% While GDP in the rest of the region grew by 6.9%.”
The Asian Development Bank now expects developing Asia – excluding China – to grow by 5.3% in 2022, and China by 3.3% in the same year.
Both numbers are further cuts – In July, for example, it cut its growth forecast for China to 4% from 5%.. The Asian Development Bank attributed this to sporadic shutdowns from the country’s non-proliferation policy, problems in the real estate sector, and slowing economic activity in light of weak external demand.
It also lowered its 2023 forecast for China’s economic growth to 4.5% from April’s 4.8% forecast because “deteriorating external demand continues to dampen investment in manufacturing.”
The Asian Development Bank said that although the region is showing signs of continued recovery through reviving tourism, global headwinds are slowing overall growth.
For the region, the Asian Development Bank now expects emerging Asian economies to grow by 4.3% in 2022 and 4.9% in 2023 – a downgraded forecast from Revised forecasts for July at 4.6% and 5.2% respectively, according to the latest forecast report released on Wednesday.
Recent updates to the Asian Development Outlook also projected the pace of price hikes to accelerate further to 4.5% in 2022 and 4% in 2023 – upward revisions to July’s forecasts of 4.2% and 3.5%, respectively, citing additional inflationary pressures from food. and energy costs.
“Regional central banks are raising their policy rates as inflation has now risen above pre-pandemic levels,” he said. “This contributes to tightening financial conditions amid bleak growth expectations and accelerated monetary tightening by the Federal Reserve.”
“The People’s Republic of China remains the largest exception due to intermittent but strict lockdowns to stem sporadic outbreaks,” the Asian Development Bank said, referring to the People’s Republic of China.
In contrast, “relaxation of epidemiological restrictions, increased immunization, lower death rates from Covid-19, and a less severe health impact of the Omicron variant all support improved mobility across much of the region,” the report added.