The Asian Development Bank (ADB) has revised its growth outlook for developing Asia, highlighting potential economic challenges from shifting U.S. policies that could slow growth and increase inflation.
In a report published on Wednesday, the ADB lowered its growth forecast for developing Asia to 4.9% from 5.0% for this year, and similarly tapered its 2025 projection to 4.8% from 4.9%.
The bank pointed out that risks remain skewed towards a downturn, with unexpected and significant U.S. policy adjustments, heightened geopolitical tensions, or vulnerabilities in China’s property market posing potential threats to the economic forecast.
For China, growth predictions remain steady at 4.8% for 2024 and 4.5% for 2025. The ADB noted that the immediate effects of the recent U.S. election on China are expected to be limited, and anticipates growth to benefit from increased U.S. imports next year. The negative impacts of U.S. tariffs on China, however, are anticipated to occur beyond the current forecast period.
Within specific subregions, the growth forecast for East Asia in 2024 has been slightly reduced to 4.5% from 4.6%, with the 2025 forecast unchanged at 4.2%. Similarly, South Asia's growth predictions have been downgraded to 5.9% for 2024 and 6.3% for 2025, largely attributed to India's unexpectedly lower growth in the second quarter.
India’s growth forecast has been adjusted to 6.5% for the financial year ending March 2025, and 7.0% for the subsequent financial year. This reduction reflects a GDP growth slowdown to 5.4% in the second quarter of FY2024 due to weaker industrial output.
Conversely, Southeast Asia's growth projection for 2024 has improved to 4.7% from 4.5%, thanks to robust manufacturing exports and increased public capital expenditures in larger economies, as noted by the ADB.
The growth outlook for the Caucasus and Central Asia has also seen an upgrade, moving to 4.9% from 4.7% in 2024, and to 5.3% from 5.2% for 2025. Meanwhile, the Pacific's growth predictions remain steady at 3.4% for 2024 and 4.1% for the following year.
Additionally, the ADB has adjusted inflation forecasts for developing Asia, predicting a reduction to 2.7% in 2024 and 2.6% in 2025, primarily driven by declining global commodity prices.
