Developing Asia Economies Set to Grow 5.2% This Year Amid Global Uncertainty
Developing Asia’s economies are forecast to grow 5.2% this year and 5.3% in 2023, thanks to a robust recovery in domestic demand and continued expansion in exports. However, uncertainties stemming from the Russian invasion of Ukraine, the continuing coronavirus disease (COVID-19) pandemic, and tightening by the United States Federal Reserve pose risks to the outlook.
Several subregions, including South Asia and East Asia, are expected to return to the economic growth rates they experienced before the pandemic, according to the Asian Development Outlook (ADO) 2022, released by the Asian Development Bank (ADB) today. Inflation in the region remains manageable but is forecast to rise to 3.7% this year, before moderating to 3.1% in 2023.
The Russian invasion of Ukraine poses the most severe risk to developing Asia’s economic outlook. The war is already affecting economies in the region through sharp increases in prices for commodities such as oil, and has heightened instability in global financial markets. COVID-19 continues to impact many parts of developing Asia, with some economies experiencing new surges in cases.
“Economies in developing Asia are starting to find their footing as they slowly emerge from the worst of the COVID-19 pandemic,” said ADB Chief Economist Albert Park. “However, geopolitical uncertainty and new COVID-19 outbreaks and virus variants could derail this momentum. Governments in the region will need to remain vigilant and prepared to take steps to counter these risks. That includes making sure as many people as possible are fully vaccinated against COVID-19. Monetary authorities should also continue to monitor their inflation situation closely and not fall behind the curve.”
Along with the recovery in domestic demand, and looser mobility restrictions on account of vaccination progress, increasing exports fueled developing Asia’s recovery last year. Remittances to the region also remained resilient, especially for economies relying heavily on these incoming money transfers, such as Bangladesh, the Kyrgyz Republic, Pakistan, and Tajikistan. International tourism began to pick up for economies that have started to reopen, including Maldives, Sri Lanka, and some economies in the Pacific.
Most of developing Asia will see steady growth this year and in 2023. Economies in the Caucasus and Central Asia are forecast to grow 3.6% on average this year and 4.0% next year. The trade-dependent economies of Southeast Asia are forecast to grow collectively by 4.9% this year and 5.2% in 2023. Pacific economies, which are highly dependent on tourism, are expected to grow 3.9% this year and 5.4% in 2023, following a 0.6% contraction in 2021.
East Asia is expected to see economic growth of 4.7% this year and 4.5% in 2023. The People’s Republic of China, the region’s largest economy, is forecast to grow 5.0% this year and 4.8% next year, amid continued export strength. South Asian economies are expected to expand collectively by 7.0% in 2022 and 7.4% in 2023, with India—the subregion’s largest economy—expected to grow 7.5% this fiscal year and 8.0% next fiscal year.
ADO 2022 features a special analysis of the learning losses from school closures caused by COVID-19. It notes how these learning losses have hit girls and students from poor households disproportionately, reducing their future earnings potential by more and thus increasing inequality. The special topic is an update to ADB’s previous study on learning and earning losses in the region, released in April 2021.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.