According to the Asian Development Bank (ADB), Developing Asia is set to experience faster growth in 2023 compared to the previous year. This growth is driven by strong consumer spending and investment, which counterbalances the negative effects of sluggish global demand.
The ADB has maintained its growth forecast for developing Asia at 4.8% for 2023 but slightly lowered its estimate for the following year to 4.7%. The revision is attributed to potential risks, including the impact of Russia’s war on Ukraine.
Developing Asia comprises 46 economies in the Asia-Pacific region, excluding Japan, Australia, and New Zealand. The ADB’s growth projections for East Asia and South Asia remain unchanged, with China and India expected to expand by 5% and 6.4% in 2023, respectively, and 4.5% and 6.7% in 2024. However, the outlook for Southeast Asia has been slightly trimmed due to weaker global demand for exports. The growth rate for Southeast Asia is projected to be 4.6% in 2023 and 4.9% in 2024, down from previous estimates of 4.7% and 5%.
One potential positive factor for the region’s growth outlook is slower inflation, which has allowed most central banks in the area to hold off on tightening monetary policies, thus supporting domestic consumption. Inflation in the region is expected to slow to 3.6% in 2023, down from the previous forecast of 4.2%, and further decelerate to 3.4% in 2024.
However, the ADB highlights that Pakistan’s growth in FY23 was hindered by tight monetary and fiscal policies aimed at safeguarding macroeconomic stability, as well as inflation and significant damage from flooding. The projections for Pakistan in FY24 assume that the government will continue implementing reforms as recommended by the IMF under a new policy-support program approved on July 12th, 2023.
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