Asia’s economic growth outlook remains stable
According to the latest report from the Asian Development Bank, Asia’s economies are expected to have a strong year with steady growth and slowing inflation, despite some potential risks.
Asia’s developing economies are benefiting from resilient domestic demand and robust exports, which are helping to mitigate the risks posed by trade and geopolitical tensions, according to the multilateral bank’s report on Wednesday. It revised its forecast for the year, expecting gross domestic product growth of 5.0% compared to the 4.9% predicted in April. Last year saw an expansion of 5.1%, while this year’s growth stands in contrast to that.
Based in Manila, Philippines The ADB predicts that the region, which includes 46 member countries such as China, South Korea, and India, will experience similar levels of economic growth next year.
“Exports have rebounded and are playing a significant role in driving the region’s growth,” stated economists from the ADB.
The strong global demand for chips and electronics is providing a significant boost for Asia. According to the Asian Development Bank (ADB), the current semiconductor boom is not only benefiting high-technology goods producers like South Korea and Taiwan, but also other economies such as the Philippines and Vietnam.
The Asian Development Bank has revised its economic growth forecasts for Taiwan and South Korea in 2024. Taiwan’s growth forecast has been raised to 3.5% from the previous estimate of 3.0%, while South Korea’s forecast has been increased to 2.5% from 2.2%.
India is expected to maintain its position as the leader in regional growth, with the Asian Development Bank projecting an expansion of 7.0%. The South Asian powerhouse experienced a slight slowdown in the first quarter, but the bank expects a recovery in agriculture and robust industrial activity to provide support.
India’s strong performance may counterbalance the negative impact of China’s economic slowdown in the region. ADB forecasts a growth rate of 5.1% for developing Asia this year, excluding China.
Continued weakness in the Chinese economy has raised concerns about the country’s ability to achieve its GDP growth target of around 5%. Indications of weak retail sales and an ongoing housing market crisis indicate that consumer confidence is still low and stabilization is yet to be seen.
ADB has stated that its growth outlook for China in 2024 remains unchanged at 4.8% at this point. According to ADB Principal Economist John Beirne, the economy had a strong performance in the first three months of the year, although second-quarter growth fell short of market expectations.
“Considering the future of the year, there is still a potential risk in the property sector, but growth will be supported by policy measures and the improvement in exports,” he stated.
Crucially for the regional outlook, inflation, which has been a cause for concern in multiple economies, is projected to decrease further due to the implementation of strict monetary policies and the decline in global food prices, according to the ADB.
According to the bank’s projections, inflation in Asia is predicted to decrease to 2.9% this year from 3.3% last year, and then remain stable at 3.0% in 2025. In April, it had forecasted inflation to be 3.2% by 2024.
However, the future for the region remains uncertain. According to the report, Asia’s growth trajectory is at risk due to the impact of elections in major economies, a potential downturn in China’s property market, and unforeseen weather events.
“Although growth projections have not significantly changed, there are still concerns about potential risks such as increased geopolitical tensions, trade fragmentation, and uncertainties surrounding elections,” stated the ADB.
