ADB Keeps Growth Forecast for Developing Asia, Anticipates More Stimulus in China, According to Reuters

MANILA (Reuters) – The Asian Development Bank (ADB) announced on Wednesday that developing Asia is projected to achieve a growth rate of 5% this year, driven by robust consumption and high demand for technology exports. Additionally, the ADB forecasted that China would implement further economic support measures.

In its updated Asian Development Outlook report, the ADB maintained most growth projections for the region’s economies, keeping its growth forecast for developing Asia at 5.0% for this year and 4.9% for the next.

The bank also lowered its inflation estimates for developing Asia, which encompasses 46 countries in the Asia-Pacific, adjusting the figures to 2.8% for this year and 2.9% for the following year, down from earlier predictions of 2.9% and 3.0%, respectively.

However, the ADB pointed out several risks that could impact its outlook, including increasing protectionism, rising geopolitical tensions, adverse weather conditions, and the ongoing downturn in China’s property sector.

China, identified as the world’s second-largest economy, is currently facing deflationary pressures and is struggling to stimulate growth, despite various policy measures aimed at boosting domestic consumption. The country’s central bank recently announced broad monetary stimulus and property market support initiatives to restore economic confidence.

“Whether that will be effective remains to be seen, as many structural issues in the property sector are still persistent,” commented ADB Chief Economist Albert Park during a briefing. He added that “more proactive government policy would be beneficial” to alleviate concerns among consumers and investors.

Park also expressed a degree of optimism regarding deflation in China, noting the expectation of price recovery. This follows last week’s actions by the U.S. Federal Reserve, which initiated its own easing cycle with a significant half-percentage-point interest rate cut. “With the Fed’s rate cut, central banks have more capability to ease their policies, and we anticipate that more will do so,” Park stated.

The ADB has maintained its 2024 growth forecast for China at 4.8%, which is below the government’s official target of around 5%. For 2025, growth is projected at 4.5%. Park emphasized that the growth forecast for China would remain unchanged despite the ongoing challenges in the property sector, based on the assumption that further fiscal and monetary easing will support economic stability.

The growth and inflation forecasts for the region, along with specific projections for various countries, highlight the current economic landscape and expected trends in developing Asia.