Chinese workers at a construction site at sunset in Chongqing, China.
Asia’s developing economies may be showing signs of recovery, but the Asian Development Bank (ADB) has cut their growth forecasts again, thanks to China’s long-running zero-Covid policy.
But the Manila-based lender said in its latest outlook report released Wednesday that other developing countries in Asia will grow faster than China for the first time in more than 30 years.
“The last time was in 1990, When (China’s) growth slows to 3.9% The rest of the region’s GDP expanded by 6.9%.”
ADB now expects developing Asia ex-China to grow 5.3% in 2022, with China growing 3.3% in the same year.
Both numbers are further downgraded — For example, in July we lowered our growth forecast for China from 5% to 4%.ADB blames sporadic lockdowns due to the country’s zero Covid policy, real estate sector problems, and a slowdown in economic activity given weak external demand.
It also lowered its forecast for China’s economic growth in 2023 to 4.5% from 4.8% in April, as “worsening external demand continues to dampen investment in manufacturing.”
Global headwinds are slowing overall growth, although the region is showing signs of continued recovery through a resurgence in tourism, according to ADB.
For the region, ADB now expects emerging Asian economies to grow by 4.3% in 2022 and 4.9% in 2023. Revised forecasts of 4.6% and 5.2% for July respectively, according to the latest outlook report released Wednesday.
The latest update of the Asian Development Outlook also forecasts that the pace of inflation will accelerate further, to 4.5% in 2022 and 4% in 2023. July forecasts were revised up to 4.2% and 3.5% respectively, citing additional inflationary pressure from food. and energy costs.
“Regional central banks are raising their policy rates as inflation surpasses pre-pandemic levels,” he said. “This has contributed to tightening financial conditions amid a slowing growth outlook and accelerated monetary tightening by the Fed.”
Referring to the People’s Republic of China, ADB said, “China remains the major exception as it has implemented intermittent but strict lockdowns to eradicate sporadic outbreaks.”
In contrast, “easing pandemic restrictions, increasing immunization, reducing Covid-19 mortality, and mitigating the severe health impact of the Omicron variant could lead to improved mobility in much of the region.” I support you,” he added to the report.