ADB Forecasts Developing Asia’s Economy to Grow 4.9% in 2024

The Asian Development Outlook (ADO) April 2024, released by the Asian Development Bank (ADB) today, forecasts that developing economies in Asia and the Pacific will expand by an average of 4.9% this year.

This growth is attributed to the region’s resilient growth driven by robust domestic demand, improving semiconductor exports, and recovering tourism.

The ADO predicts that growth will remain steady at the same rate next year. Inflation is expected to ease in 2024 and 2025 after being pushed up by higher food prices in many economies over the past two years.

Stronger growth in South and Southeast Asia, fueled by both domestic demand and exports, is counterbalancing a slowdown in the People’s Republic of China (PRC) due to weakness in the property market and subdued consumption. India is projected to remain a major growth engine in the region, with a 7.0% expansion this year and 7.2% next year. The PRC’s growth is forecasted to slow to 4.8% this year and 4.5% next year, down from 5.2% last year.

ADB Chief Economist Albert Park stated, “We anticipate strong, stable growth for the majority of economies in developing Asia this year and next. Consumer confidence is on the rise, and investment remains resilient overall. External demand, especially for semiconductors, also shows signs of improvement.”

However, policymakers should remain cautious as there are several risks, including supply chain disruptions, uncertainty regarding US monetary policy, extreme weather events, and further weaknesses in the PRC’s property market.

Inflation in developing Asia and the Pacific is expected to decrease to 3.2% this year and 3.0% next year, as global price pressures ease and monetary policy remains tight in many economies. Nevertheless, inflation in the region excluding the PRC remains higher than pre-COVID-19 pandemic levels.

Rice prices have contributed to elevated food inflation, particularly for import-reliant economies. ADO April 2024 suggests that rice prices are likely to remain high this year due to crop losses from adverse weather and India’s restrictions on rice exports. Additionally, increased global shipping costs, stemming from attacks against ships in the Red Sea and drought in the Panama Canal, may further contribute to inflation in Asia.

To address surging rice prices and ensure food security, governments can provide targeted subsidies to vulnerable populations, enhance market transparency and monitoring to prevent price manipulation and hoarding, and establish strategic rice reserves to stabilize prices in the medium to long term. Moreover, investing in sustainable farming practices, crop diversification, agricultural technology, and infrastructure to boost productivity is crucial. Regional cooperation is also essential for managing rice prices and their impact.

Established in 1966 and owned by 68 members, of which 49 are from the region, ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while continuing efforts to eradicate extreme poverty.