According to the new Asian Development Outlook (ADO) by the Asian Development Bank (ADB), developing economies in Asia and the Pacific are forecast to expand by 4.9% on average this year as the region continues its growth amid robust domestic demand, improving semiconductor exports, and recovering tourism.
Growth will continue at the same rate next year, but inflation is expected to moderate in 2024 and 2025, after being pushed up by higher food prices in many economies over the past two years.
Strong growth in Southeast Asia is offsetting a slowdown in the People’s Republic of China (PRC) caused by weakness in the property market and subdued consumption. The PRC’s growth is forecast to slow to 4.8% this year and 4.5% next year, from 5.2% last year.
“Consumer confidence is improving, and investment is resilient overall. External demand also appears to be turning a corner, particularly about semiconductors,” ADB Chief Economist Albert Park says.
Inflation in developing Asia and the Pacific is expected to decline to 3.2% this year and 3.0% next year, as global price pressures ease and as monetary policy remains tight in many economies.
Rice prices have contributed to higher food inflation, especially for import-reliant economies. Rice prices are likely to stay elevated this year, according to the report. Reasons include crop losses due to adverse weather and India’s restrictions on rice exports. Increased global shipping costs, due to attacks against ships in the Red Sea and drought in the Panama Canal, may also add to inflation in Asia.
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