The Asian Development Bank (ADB) announced on Wednesday that economic expansion in developing countries of Asia will be slightly reduced this year due to the decline in China’s real estate industry and potential risks associated with El Niño.
The ADB revised its prediction for developing Asia’s economic growth in 2023 to 4.7%, down from the previous estimate of 4.8% made in July.
The projected increase for the upcoming year for the group, which includes 46 economies in the Asia-Pacific region but does not include Japan, Australia, and New Zealand, was adjusted slightly upwards to 4.8% from the previous estimate of 4.7%.
The region’s growth remains strong due to robust domestic consumption and investment, despite a decrease in external demand that has affected export-driven growth. This was stated by Albert Park, ADB’s chief economist, during a press conference.
The Asian Development Bank has adjusted its predicted growth rates for East Asia, South Asia, and Southeast Asia for this year. China and India are expected to experience growth of 4.9% and 6.3%, respectively, which is slightly lower than the previously projected rates of 5.0% and 6.4% in July.
The ADB stated in its report that the property crisis in China could potentially hinder regional growth and presents a negative risk.
The lender headquartered in Manila kept its predictions for China and India’s growth in 2024 at 4.5% and 6.7%, respectively.
Although developing Asian countries have experienced strong growth and a decrease in inflation, Park emphasizes the importance of remaining vigilant against the numerous challenges that the region encounters, such as food security.
The expected inflation rate for developing countries in Asia is predicted to decrease from 4.4% to 3.6% this year, and is expected to further decline to 3.5% in 2024. This will allow central banks to have more flexibility in their policies, although the ADB notes that interest rate adjustments may differ in the future.