Chinese laborers working 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) cut its growth forecasts for them yet again — thanks to China’s prolonged zero-Covid policy.
But this will be the first time in more than three decades that the rest of developing Asia will grow faster than China, the Manila-based lender said in its latest outlook report released Wednesday.
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“The last time was in 1990, when (China’s) growth slowed to 3.9% while GDP in the rest of the region expanded by 6.9%,” it said.
The ADB now expects developing Asia — excluding China — to grow by 5.3% in 2022, and China by 3.3% in the same year.
Both figures are further downgrades — in July, for example, it slashed its growth forecast for China to 4% from 5%. The ADB attributed that to sporadic lockdowns from the nation’s zero-Covid policy, problems in the property sector, and slowing economic activity in light of weaker external demand.
It also lowered its 2023 forecast for China’s economic growth to 4.5% from April’s 4.8% outlook on “deteriorating external demand continuing to dampen investment in manufacturing.”
Though the region is showing signs of continued recovery through revived tourism, global headwinds are slowing down overall growth, the ADB said.
For the region, the ADB now expects emerging Asian economies to grow by 4.3% in 2022 and 4.9% in 2023 — a downgraded outlook from July’s revised predictions of 4.6% and 5.2% respectively, according to its latest outlook report released Wednesday.
The latest updates to the Asian Development Outlook also predicted that the pace of rising prices will accelerate even further to 4.5% in 2022 and 4% in 2023 — an upwards revision July’s predictions of 4.2% and 3.5% respectively, citing added inflationary pressures from food and energy costs.
“Regional central banks are raising their policy rates as inflation has now risen above pre-pandemic levels,” it said. “This is contributing to tighter financial conditions amid a dimming growth outlook and accelerated monetary tightening by the Fed.”
“The PRC remains the big exception because of its intermittent but stringent lockdowns to stamp out sporadic outbreaks,” the ADB said, referring to the People’s Republic of China.
In contrast to that, “Easing pandemic restrictions, increasing immunization, falling Covid-19 mortality rates, and the less severe health impact of the Omicron variant are underpinning improved mobility in much of the region,” it added in the report.