Today (15.12.2022), Asian Development Bank (ADB) released its Asian Development Outlook (ADO) Supplement. ADB in its ADO stated that there are three main factors which continues to affect the recovery in Developing Asia. They are i) recurrent lockdowns in the People’s Republic of China (PRC), ii) the Russian invasion of Ukraine, and iii) slowing global growth.

 The Growth forecasts for the Asian region are revised down from 4.3% to 4.2% in 2022 and from 4.9% to 4.6% 2023. The growth forecast of East Asia is revised down to 2.9% in 2022, due to the mobility restrictions in china, along with deep contraction in Hong Kong, china and down to 4.0% in 2023.

ADB maintained the South Asian forecast for 2022 at 6.5% but it has reduced the growth rate forecasts marginally for 2023 from 6.5% to 6.3%. This is due to flood in Pakistan and slowdown in Bangladesh.

ADB has upgraded the forecast for Southeast Asia from 5.1% to 5.5%. This is due to strong increase in consumption and tourism recovery in Malaysia, Thailand, Vietnam and the Philippines. For 2023, the forecast was downgraded to 4.7% as global demand deteriorates.

The Growth prospects for the Central Asia and the Caucasus are upgraded from 3.9% to 4.8% in 2022. This is due to spillover from the Russian Invasion of Ukraine has been more benign than expected. Even for the Pacific region the growth prospected is upgraded to 5.3% from 4.7%. This is due to strong tourism recovery in Fiji Islands.

Inflation, which is a global worrisome for the next couple of years, has been revised down faintly from 4.5% to 4.4% for 2022 in Asian region. But, the same is upgraded for the next year (i.e. 2023) from 4.0% to 4.2%.

Though there is decline in the inflation rate it is still above normal level in many countries. There is a possibility of supply disruptions and price shocks. This is requires continuous vigilance from the policy makers.

The Monetary authorities in developing Asia increased policy rates 68 times with an average of 63 basis points per hike so far in 2022. This has tightened financial conditions in the region. The hike this year is greater than – 23 rate hikes averaging 38 points per hike in – 2021. This is mainly influenced by the aggressive rate hikes in the US and Europe.

Despite gloomy outlook, developing Asia will still grow stronger than other regions and also will have less inflation than most of other developing nations.

The following table and graph is from the ADB report