ADB Increases Asia-Pacific Growth Forecast to 5.0% Amid Rising Domestic Demand and Exports

The Asian Development Bank has slightly increased its 2024 economic growth forecast for developing Asia and the Pacific to 5.0%. The revision reflects strong domestic demand and a rebound in regional exports, driven by global demand for electronics and AI applications.

ADB Raises Asia-Pacific Growth Forecast to 5.0%, Citing Strong Domestic Demand and Rebounding Exports

The Asian Development Bank (ADB) has marginally increased its economic growth forecast for developing Asia and the Pacific this year to 5.0% from a previous projection of 4.9%. This increase is due to resilient domestic demand complemented by increasing regional exports. The growth forecast for the upcoming year remains at 4.9%.

The latest edition of the Asian Development Outlook (ADO), released on July 17, predicts that inflation will decrease to 2.9% this year due to the residual effects of higher interest rates and the easing of global food prices.

Exports are rebounding, contributing to the region's economic expansion following a post-pandemic recovery primarily propelled by domestic demand. Exports from numerous Asian nations are increasing due to the robust global demand for electronics, particularly semiconductors in high-tech and artificial intelligence applications.

“Most of Asia and the Pacific is seeing faster economic growth compared with the second half of last year,”said ADB Chief Economist Albert Park. “The region’s fundamentals remain strong, but policy makers still need to pay attention to a number of risks that could affect the outlook, from uncertainty related to election outcomes in major economies to interest rate decisions and geopolitical tensions.”

Despite Inflation Easing, Asia-Pacific Faces High Food Prices; China and India Lead Regional Growth

In some economies, price pressures remain elevated despite inflation subsiding to pre-pandemic levels in the region. Food export restrictions and adverse weather conditions have contributed to the persistently high levels of food inflation in South Asia, Southeast Asia, and the Pacific.

According to Reuters, the People's Republic of China (PRC), the region's largest economy, is expected to maintain a development rate of 4.8% this year. The expansion is being bolstered by a persistent recovery in services consumption and stronger-than-anticipated exports and industrial activity, even though the property sector in the PRC has yet to stabilize. The government implemented supplementary policy measures in May to bolster the property market.

As for India, the fastest-growing economy in the region, the outlook remains unchanged at 7.0% for fiscal year 2024. Manufacturing and robust demand in construction are anticipated to fuel India's industrial sector's strong growth. Investment demand remains strong, with public investment as the primary driver, and agriculture is expected to experience a rebound in anticipation of an above-average monsoon.

The growth forecast for Southeast Asia is maintained at 4.6% this year due to substantial improvements in domestic and external demand. The Caucasus and Central Asia's outlook for this year has been revised from 4.3% to 4.5%, a change that is partially due to the Kyrgyz Republic and Azerbaijan's stronger-than-expected development. The outlook for 2024 in the Pacific region remains at 3.3% growth, with tourism and infrastructure spending and reinvigorated mining activity in Papua New Guinea being the primary drivers.

ADB is dedicated to the sustainable, resilient, inclusive, and prosperous development of Asia and the Pacific while simultaneously maintaining its efforts to eradicate extreme poverty. It was founded in 1966 and is owned by 68 members, 49 of whom are from the region.