Three main headwinds continue to hamper recovery in developing Asia: recurrent lockdowns in the People's Republic of China, the Russian invasion of Ukraine, and slowing global growth. Growth forecasts for the region are revised down from 4.3% to 4.2% in 2022 and from 4.9% to 4.6% in 2023.
Highlights
- East Asia’s growth forecasts are revised down to 2.9% in 2022—due to the mobility restrictions mentioned above plus deep contraction in Hong Kong, China—and down to 4.0% in 2023.
- The South Asian forecast for 2022 is maintained at 6.5% but revised down marginally for 2023 from 6.5% to 6.3% following a slowdown in Bangladesh and flooding in Pakistan.
- The 2022 forecast for Southeast Asia is upgraded from 5.1% to 5.5% on robust consumption and tourism recovery in Malaysia, the Philippines, Thailand, and Viet Nam. The 2023 forecast is revised down to 4.7% as global demand weakens.
- Growth prospects in the Caucasus and Central Asia are adjusted up from 3.9% to 4.8% in 2022 as spillover from the Russian invasion of Ukraine has been more benign than expected. The growth forecast for the Pacific in 2022 is also revised up, from 4.7% to 5.3% on a strong tourism rebound in Fiji.
- Regional inflation forecasts are revised down slightly for 2022 from 4.5% to 4.4% but upgraded for 2023 from 4.0% to 4.2%. Even with outlook deterioration, developing Asia will grow more than other regions and suffer less inflation than most.
- Multiple risks abound as the three main headwinds could worsen, along with geopolitical risks and climate change.