The Asian Development Bank (ADB) has lowered its economic growth forecasts for developing Asia and the Pacific amid a worsened global outlook.

The regional economy will grow 4.2 this year and 4.6 per cent next year, according to ADB’s regular supplement to the Asian Development Outlook (ADO) 2022, released recently. The ADB estimated in September that the regional economy would grow 4.3 per cent in 2022 and 4.9 per cent in 2023.

Monetary policy tightening by central banks globally and in the region, the protracted Russia - Ukraine conflict, and recurring lockdowns in China are slowing down developing Asia’s recovery from Covid-19. Restrictions under its “zero-COVID” approach, along with a struggling property market, have led to another downgrade of China’s growth outlook.

“Asia and the Pacific will continue to recover, but worsening global conditions mean that the region’s momentum is losing some steam as we head into the new year,” said ADB Chief Economist Albert Park. “Governments will need to work together more closely to overcome the lingering challenges of Covid-19, combat the effects of high food and energy prices, especially on the poor and the vulnerable, and ensure a sustainable, inclusive economic recovery.”

The bank also lowered its forecast for inflation in developing Asia and the Pacific this year, to 4.4 per cent from 4.5 per cent. However, it raised its projection for next year to 4.2 per cent from 4.0 per cent, due to lingering inflationary pressures from energy and food.

China’s economy is forecast to expand 3.0 per cent this year, down from the previous projection of 3.3 per cent. The forecast for next year has been cut to 4.3 per cent from 4.5 per cent, due to the global slowdown. GDP growth projections for India were maintained at 7.0 per cent this fiscal year and 7.2 per cent next fiscal year.

Even with downgraded forecasts, developing Asia will still do better than other regions, both in terms of growth and inflation. The ADB’s growth forecast for Southeast Asia this year has been raised to 5.5 per cent from 5.1 per cent, amid robust consumption and tourism recovery in Malaysia, the Philippines, Thailand, and Vietnam. Projections for next year, however, were lowered to 4.7 per cent from 5.0 per cent due to weakening global demand.

While Vietnam’s economy is performing well amid the uncertainties in the global economy, risks to the economic outlook have become elevated. The ADB raised its forecast for Vietnam’s economic growth to 7.5 per cent this year. Inflation in 2022 has been revised down to 3.5 per cent.

Though trade continues to expand, signs show weakening global demand for the country’s exports. Growth in 2023 is therefore adjusted down to 6.3 per cent as major trade partners weaken.

The growth forecast for the Caucasus and Central Asia this year was upgraded to 4.8 per cent from 3.9 per cent, while the projection for the Pacific was raised to 5.3 per cent from 4.7 per cent due to a strong tourism recovery in Fiji.