ADB Lowers Growth Forecast for Developing Asia

MANILA (Reuters) – Developing Asia is expected to grow more slowly than previously anticipated this year and next due to potential changes in U.S. trade policy, according to the Asian Development Bank (ADB).

The region, comprising 46 Asia-Pacific countries from Georgia to Samoa (excluding Japan, Australia, and New Zealand), is projected to grow 4.9% this year and 4.8% next year, slightly below the ADB's prior estimates of 5.0% and 4.9% in September.

The adjustments in growth estimates are attributed to a sluggish economic performance in some areas during the third quarter and a diminished outlook for consumption.

Key Projections

• China's Growth Forecast remains unchanged at 4.8% for 2024 and 4.5% for 2025.
• India's projections were lowered from 7.0% to 6.5% for 2024 and from 7.2% to 7.0% for next year.

The ADB cautioned that changes to U.S. trade and fiscal policies could adversely impact growth and increase inflation in developing Asia, although most effects are expected beyond 2024-2025. President-elect Trump, taking office on January 20, has proposed imposing tariffs exceeding 60% on Chinese imports and tightening immigration policies.

Risks and Inflation

The report acknowledged persistent downside risks, including abrupt U.S. policy changes, escalating geopolitical tensions, and a declining real estate market in China.

Additionally, the ADB revised its inflation forecasts for 2024 and 2025, anticipating rates of 2.7% and 2.6%, down from 2.8% and 2.9%, respectively, due to falling global commodity prices.

Growth Rates for Developing Asia

Conclusion

The ADB's outlook presents a cautionary tale for developing Asia, emphasizing the potential risks posed by shifting U.S. policies and global economic trends.