Asia-Pacific Economies
According to the Asian Development Bank’s April 2024 Asian Development Outlook (ADO) report, developing economies in Asia and the Pacific are set to witness an average growth rate of 4.9% this year.
This robust growth trajectory is supported by strong domestic demand, improving semiconductor exports, and a revival in tourism.
The report also forecasts that this growth rate will be maintained into the next year, while inflation is expected to moderate in both 2024 and 2025. This comes after a period where many of these economies faced heightened food prices.
Significant growth momentum in South and Southeast Asia is helping to counterbalance the economic slowdown in the People’s Republic of China (PRC).
The slowdown in China is attributed to ongoing issues in its property market and less robust consumer spending. Conversely, India is poised to continue as a significant driver of regional growth, with projections of 7.0% growth in 2024 and an increase to 7.2% in 2025.
China’s economic expansion, however, is expected to decelerate to 4.8% this year and further to 4.5% the following year, a drop from the 5.2% growth observed last year.
ADB Chief Economist Albert Park commented on the region’s economic outlook, noting a general trend of strong, stable growth across most developing Asian economies over the next two years.
He highlighted improving consumer confidence and resilient investment levels, alongside a recovering external demand, particularly in the semiconductor sector.
Despite the positive outlook, the ADB warned of several potential risks that could impact economic stability.
These include possible disruptions in supply chains, uncertainties surrounding U.S. monetary policy, impacts of extreme weather conditions, and continued vulnerabilities in China’s property market.
Inflation across the region is projected to decrease to 3.2% this year and to 3% in the following year, facilitated by the easing of global price pressures and stringent monetary policies in several economies. However, excluding China, inflation rates remain elevated compared to pre-pandemic levels.
The report specifically noted that rice prices are pushing food inflation higher, particularly affecting economies dependent on imports. Adverse weather conditions and export restrictions from India are expected to keep rice prices high throughout the year.
The ADO suggests that in response to rising rice prices, governments should consider targeted subsidies for vulnerable groups, enhance transparency in market operations to curb price manipulation and hoarding, and promote regional cooperation to manage price impacts.
For the long term, the ADB advises focusing on strategic rice reserves, sustainable farming practices, crop diversification, and investments in agricultural technology and infrastructure to enhance productivity, which are crucial steps toward stabilizing prices and securing food resources in the region.
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