The Asian Development Bank (ADB) has lowered its economic growth forecast for developing Asian countries and pointed to challenges such as China’s “zero Covid” lockdowns, the war in Ukraine, and rising interest rates.
The Manila based development bank announced on Wednesday that it had lowered its growth forecast for 2022 to 4.3 percent, a significant drop of 5.2 percent in April.
Excluding China, the rest of developing Asia is expected to grow by 5.3 percent in 2022 and 2023, the bank said.
The bank said that while lifting pandemic restrictions boosted consumer spending and investment across the region, the war in Ukraine “has increased global uncertainty, worsened supply disruptions, worsened supply disruptions, and unsettled energy and food markets.”
Interest rate hikes by the US Federal Reserve and the European Central Bank are also weighing on global demand, while new lockdowns in China have hampered the growth of the world’s second-largest economy, according to the bank.
The bank also raised its inflation forecast to 4.5 percent in 2022 and 4 percent in 2023, compared with 3.7 percent and 3.1 percent, respectively, due to rising food and energy prices.
ADB chief economist Albert Park said that “the risks for developing countries in the region are high despite the ongoing recovery.”
“A significant downturn in the global economy would significantly undermine demand for the region’s exports,” Park said.
“A stronger than expected monetary policy tightening in developed countries could lead to financial instability. And growth in the People’s Republic of China is facing challenges due to recurring lockdowns and a weak real estate sector.
“Developing Asian governments must remain alert to these risks and take the necessary steps to contain inflation without impeding growth.”