ADB Trims Developing Asia Growth Outlook; Warns Of Risk From Rapid US Policy Shifts

(RTTNews) - The Asian Development Bank downgraded its growth outlook for developing Asia and cautioned that rapid shifts in US policies could dent economic growth and boost inflation.

In the latest report released Wednesday, the ADB trimmed the growth forecast for developing Asia to 4.9 percent from 5.0 percent this year. Similarly, the projection for 2025 was lowered to 4.8 percent from 4.9 percent.

The lender said risks to the outlook remain tilted to the downside. Larger and more rapid US policy shifts than assumed in the baseline could worsen the outlook, as could greater geopolitical tensions or property market fragility in China.

Growth forecasts for China were maintained at 4.8 percent for 2024 and 4.5 percent for 2025. The ADB observed that the short-term impact of the recent US election on China was set to be muted and growth could benefit next year from frontloading of US imports.

The bank noted that adverse impacts of the US tariffs on China are expected to be felt only beyond the forecast horizon.

Among sub regions, East Asia's growth forecast in 2024 was revised downward marginally to 4.5 percent from 4.6 percent and remained unchanged at 4.2 percent for 2025.

Likewise, the growth forecasts for South Asia were downgraded to 5.9 percent for 2024 and 6.3 percent for 2025. The lower forecast for 2024 was mainly due to India's lower-than-expected second quarter growth, the report showed.

India's growth forecast was reduced to 6.5 percent for the financial year ending March 2025 and 7.0 percent for next financial year. The ADB said the lowering of the forecast for FY2024 reflects a deceleration of GDP growth in the second quarter of FY2024 to 5.4 percent on weaker-than-expected industrial output growth.

On the other hand, Southeast Asia's growth outlook for 2024 was lifted to 4.7 percent from 4.5 percent, driven by stronger manufacturing exports and public capital spending in larger economies, the bank said.

The growth projection for the Caucasus and Central Asia was also revised upward to 4.9 percent from 4.7 percent for 2024 and to 5.3 percent from 5.2 percent for 2025.

At the same time, growth projections for the Pacific were maintained at 3.4 percent in 2024 and 4.1 percent next year.

Further, the ADB adjusted developing Asia's inflation forecasts down to 2.7 percent in 2024 and 2.6 percent in 2025, mainly due to softening global commodity prices.