Asian Development Bank Raises 2024 Growth Forecast for Developing Asia to 5.0%

Inflation in the region is expected to ease to 2.9% this year, driven by declining global food prices and the lingering effects of higher interest rates.

The Asian Development Bank (ADB) has revised its economic growth forecast for developing Asia and the Pacific region slightly upwards to 5.0% for this year, up from a previous projection of 4.9%. The outlook for next year remains steady at 4.9%. This adjustment reflects rising regional exports alongside resilient domestic demand, as outlined in the latest edition of the Asian Development Outlook (ADO) released today.

Inflation in the region is expected to ease to 2.9% this year, driven by declining global food prices and the lingering effects of higher interest rates. The recovery in exports, particularly in electronics like semiconductors used for high-technology and artificial intelligence applications, is a significant contributor to economic growth across several Asian economies.

Albert Park, Chief Economist at ADB, highlighted, “Most of Asia and the Pacific is experiencing accelerated economic growth compared to the latter half of last year. The region's fundamentals remain robust, but policymakers must remain vigilant against various risks, including uncertainties related to election outcomes in major economies, interest rate adjustments, and geopolitical tensions.”

While overall inflation is moderating towards pre-pandemic levels, some economies in South Asia, Southeast Asia, and the Pacific continue to face elevated food inflation due to adverse weather conditions and food export restrictions.

The growth forecast for the People’s Republic of China (PRC), the largest economy in the region, remains unchanged at 4.8% for this year. Recovery in services consumption and robust exports and industrial activities are bolstering growth, despite ongoing challenges in the PRC’s property sector, for which additional supportive measures were introduced in May.

India, as the region’s fastest-growing economy, maintains a growth forecast of 7.0% for fiscal year 2024. Strong performance in the industrial sector, driven by manufacturing and construction demand, coupled with expected agricultural rebound due to favorable monsoon forecasts and sustained public investment, are key growth drivers.

Southeast Asia is projected to maintain a growth rate of 4.6% this year, supported by improvements in domestic and external demand. The Caucasus and Central Asia region sees an upgraded growth forecast to 4.5%, driven by stronger-than-anticipated growth in Azerbaijan and the Kyrgyz Republic. In the Pacific, growth prospects for 2024 are maintained at 3.3%, driven by tourism, infrastructure investments, and renewed mining activities in Papua New Guinea.

The ADB's latest economic outlook underscores the region's resilience and potential amidst ongoing global economic dynamics and underscores the importance of targeted policy responses to sustain growth momentum.