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Asia’s developing economies set to grow faster than China

Chinese workers working on a construction site at sunset in Chongqing, China.

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Asia’s developing economies may be showing signs of recovery, but the Asian Development Bank (ADB) has once again cut its growth forecast for them, thanks to China’s extended zero Covid policy.

But it will be the first time in more than three decades that the rest of developing Asia will grow faster than China, the Manila-based lender said in its latest outlook report released on Wednesday.

“The last time was in 1990, when (China’s) growth slowed to 3.9% while the rest of the region’s GDP grew by 6.9%,” he said.

The AfDB now expects developing Asia – excluding China – to grow 5.3% in 2022, and China 3.3% in the same year.

The [People’s Republic of China] remains the big exception due to its intermittent but strict closures to eradicate sporadic outbreaks.

Both figures are further downward revisions – in July, for example, it cut its growth forecast for China to 4% from 5%. The AfDB attributed this to sporadic lockdowns of the national zero-Covid policy, problems in the real estate sector and slowing economic activity in light of weaker external demand.

It also lowered its forecast for China’s economic growth in 2023 to 4.5% from April’s 4.8% outlook on “deteriorating external demand that continues to dampen investment in the manufacturing sector”. .

Recovery does not help

Although the region is showing signs of continued recovery thanks to the revival of tourism, global headwinds are slowing overall growth, the AfDB said.

For the region, the AfDB now expects emerging Asian economies to grow by 4.3% in 2022 and 4.9% in 2023 – a downgraded outlook from July’s revised forecast. 4.6% and 5.2% respectively, according to its latest outlook report released on Wednesday.

The latest Asian Development Outlook updates also predicted that the pace of price increases would accelerate even further to 4.5% in 2022 and 4% in 2023 – an upward revision to the July forecast of 4.2% and 3.5% respectively, citing additional inflationary pressures from food. and energy costs.

“Regional central banks are raising policy rates as inflation has now risen above pre-pandemic levels,” he said. “This is helping to tighten financial conditions amid a darkening growth outlook and accelerating monetary tightening by the Fed.”

China, the “great exception”

“The PRC remains the big exception due to its intermittent but strict lockdowns to eradicate sporadic outbreaks,” the AfDB said, referring to the People’s Republic of China.

In contrast, “the easing of pandemic restrictions, increased vaccination, lower death rates from Covid-19 and the less severe health impact of the Omicron variant underpin improved mobility in a large part of the region,” he added in the report.

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