Asian Development Outlook (ADO) April 2023 - Country Outlook

Asian Development Outlook (ADO) April 2023: Subregional Forecasts

  • Economies in the Caucasus and Central Asia can expect steady growth, with the subregion forecast to expand by 4.4% this year and 4.6% in 2024.
  • The People's Republic of China's (PRC) reopening is brightening East Asia’s outlook with positive trade, tourism, and other spillovers to the rest of developing Asia.
  • South Asia will grow strongly, but the outlook varies substantially within the subregion. India is forecast to grow on healthy domestic demand, but Pakistan and Sri Lanka face a challenging outlook.
  • Strong tourism performance and robust domestic demand are boosting Southeast Asian economies like Indonesia, the Philippines, and Viet Nam, with the subregion projected to grow by 4.7% this year and 5.0% in 2024.
  • Continued reopening and tourism recovery are supporting growth in the Pacific, with expansion likely to reach 3.3% this year before moderating to 2.8% in 2024.

Caucasus and Central Asia

Despite headwinds, the economy grew strongly in 2022 on rapid expansion in consumption and services reflecting an influx of people and capital from the Russian Federation. Fiscal and current account deficits narrowed, but inflation accelerated. Growth is expected to moderate in 2023 and 2024 as stimulus from inflows of capital, people, and firms from the Russian Federation wanes. Inflation is expected to moderate, and the current account deficit to widen slightly. Strengthening education is critical for inclusive and sustainable growth.

Growth slowed in 2022 because of lower oil production even as high oil prices sharply widened the current account surplus. Annual inflation doubled on rising prices for food and other imported goods. Growth is projected to decelerate further in 2023 with slower expansion in services and construction before rising in 2024. Tight monetary policy and an expected decline in global commodity prices should reduce inflation in both years. Strengthening knowledge management is vital to improving policy making.

The economy posted double-digit growth in 2022, reflecting strong exports and an influx of Russian citizens. Growth should moderate in 2023 and 2024. Demand-side factors raised inflation despite tight monetary policy and a smaller fiscal deficit. Slowing domestic demand and tighter macroeconomic policies should trim inflation. Strong foreign inflows substantially narrowed the current account deficit, which will likely widen again in 2023 and 2024. It is critical to address climate change to minimize losses from disasters and promote green growth.

Growth slowed in 2022 mainly because of temporarily interrupted oil production and delivery. Inflation accelerated on currency depreciation, supply chain disruption, and fiscal stimulus, while high global energy prices turned a persistent current account deficit into a surplus. Growth will accelerate in 2023 and 2024, driven by recovering industry, services, and domestic demand. Inflation will subside with tight monetary policy and price controls, assuming a stable exchange rate. As regional disparities widen, addressing them requires place-sensitive policies and improved fiscal decentralization and redistribution.

Growth accelerated in 2022, reflecting a rebound in gold production, strong domestic demand, and milder-than-expected impact on the economy from the Russian invasion of Ukraine. Inflation also accelerated, and both fiscal and current account deficits widened. Growth and inflation are expected to moderate over the forecast period, with diminishing external inflow of funds and less favorable conditions in trade partners. Pension reform is needed for more sustainable and inclusive growth.

Growth slowed in 2022 but less than expected thanks to a rebound in remittances. Inflation fell in response to tight monetary policy, currency appreciation, and the release of strategic food reserves. The current account remained in surplus despite a wider trade deficit. Growth will slow in 2023 and recover in 2024, with inflation accelerating and then moderating. A digital economy is key to providing adequate public services and support to firms.

Gains in hydrocarbon production and exports spurred economic recovery in 2022. Inflation remained in double digits, and the current account registered a large surplus. Growth will increase slightly in 2023 and moderate in 2024. Inflation will remain elevated because of foreign exchange imbalances and large credits directed to state-owned enterprises. With the evolving agenda on climate change, Turkmenistan needs to foster energy efficiency, develop renewable energy sources, and advance technological innovation to shrink its carbon footprint and ensure sustainable growth.

Growth remained strong but slowed across all sectors in 2022. Inflation accelerated, while surging remittances and money transfers slashed the current account deficit. Cooling demand is projected to trim growth in 2023 and stabilize in 2024, especially in services and private consumption. Protracted monetary tightening is expected to reduce inflation, despite an anticipated rise in utility tariffs. A growing population and diversifying economy need education reform and improved training, particularly in science, technology, engineering, and mathematics.


East Asia

The economy contracted in 2022 for a third time in 4 years, dragged down by falling demand at home and abroad. Inflation edged up on moderate food and energy price rises. Growth is expected to rebound this year, as domestic demand and services recover, and improve in 2024 on more favorable global and domestic conditions. Inflation will likely remain low to the forecast horizon. Tax reform is needed in the medium term to move toward fiscal balance without damaging competitiveness.

Economic growth rebounded in 2022 despite exogenous shocks. Inflation accelerated further to its highest since 2008, and the current account deficit continued to widen. Growth will accelerate in 2023 and 2024 as exports recover and impacts from exogenous shocks wane. Inflation will moderate on reduced risk of trade disruption, and the current account deficit will narrow in both years as exports increase. Mongolia needs investment climate reform to ensure sustainable growth.

Economic growth is forecast to pick up in 2023 as household demand recovers following the lifting of COVID-19 restrictions, then moderate in 2024. Consumer price inflation is expected to stay subdued in 2023 and 2024 because pass-through from higher producer prices has become less likely. Boosting long-term potential growth is a policy challenge, calling for structural reform to allocate capital and credit more efficiently, address demographics, strengthen human capital, and raise productivity.

Growth moderated in 2022 as exports and investment struggled in a challenging external environment. Growth is expected to slow further in 2023 before picking up in 2024 as the global outlook improves. In 2022, inflation reached its highest in 2 decades, but it is expected to slow in line with falling rents and weaker domestic demand. The Republic of Korea (ROK) needs to address issues that arise with an aging population.

With global demand weakening, growth slowed in 2022 with sharp deceleration in exports and investment. Consumption rebounded as COVID-19 restrictions gradually eased. Inflation rose to its highest since 2008 as food and petroleum prices increased. Growth is expected to moderate further in 2023 as global demand remains weak but to rebound in 2024 as global growth recovers. Inflation will slow as energy prices stabilize and economic activity moderates. Policy action is needed to stimulate entrepreneurial activity as a new driver of growth.


South Asia

After some growth in the first half of 2022—aided by humanitarian assistance, better security, and reduced corruption—a harsh winter, a de facto government ban on higher education for girls, and restrictions on women working for nongovernment organizations seriously undermined economic activity and the delivery of humanitarian aid. These developments and continuing repercussions from the 2021 political transition may bring further economic contraction in the near term. Addressing food insecurity is a major policy challenge.

GDP growth continued to recover in fiscal 2022, buoyed by strong external demand. Inflation edged up and the current account deficit widened. Growth will slow markedly this year in line with worsening global economic conditions following the Russian invasion of Ukraine but will likely edge up next year on recovering growth in trade partners. Inflation will increase sharply this year but moderate next year. Education reform is critical to improve productivity, diversify industry, and sustain high growth.

Growth accelerated in 2022. Inflation eased, but the current account deficit widened sharply, drawing down official reserves. The outlook is for moderate slowing of growth as impetus from recovery in production and the commissioning of new hydropower projects is offset by low investment during the transition to the 13th Five Year Plan covering the period 2024-2028. Current account deficits are expected to remain elevated, placing further pressure on foreign exchange reserves. Bhutan needs a more vibrant private sector to achieve its development goals.

Spurred by private consumption and investment, the economy grew strongly in fiscal 2022, albeit more slowly than a year earlier. Rising food and fuel prices pushed inflation up beyond the central bank’s target. Growth will moderate slightly this year and rise next year, buoyed again by private consumption and investment as the global economy improves. Inflation will be on a downward trend as global price pressures moderate. Improving states’ financial management is necessary to increase needed public investment.

With continued strong recovery in tourism, double-digit growth in 2022 was exceptional in a year that saw an economic downdraft snag most countries. Inflation was kept low by subsidies, but the current account deficit increased sharply on large increases to global prices for oil and other commodities. Robust tourism and public investment are expected to underpin growth to the forecast horizon. A legacy of substantial budget deficits and high debt pose a threat to sustainability.

Growth accelerated in fiscal 2022 on continued fiscal and monetary stimulus. Inflation increased as prices for oil and other commodities rose, and the current account deficit substantially widened as imports surged. Growth will decelerate this year under tight monetary policy, the unwinding of pandemic stimulus, and persistent global headwinds, then pick up again in fiscal 2024. Inflation will rise again on elevated import prices, but the current account deficit will narrow with a reduced trade deficit and buoyant remittance inflow.

Growth remained strong in fiscal 2022, and a larger fiscal deficit pushed up inflation despite tighter monetary policy. A substantial rise in imports widened the current account deficit, and international currency reserves plunged. Growth is projected to slow substantially in fiscal 2023, reflecting the impact of floods and a foreign exchange crisis, with currency depreciation and supply disruption doubling inflation. Fiscal and current account deficits should narrow nevertheless. Pakistan urgently needs to adapt to climate change.

With the country in deep crisis, the economy contracted sharply in 2022 and is projected to contract again in 2023. Slow recovery is forecast for 2024, assuming timely progress on debt relief and much-needed reform. Inflation surged in 2022 in response to shortages but is expected to moderate somewhat in 2023 and more so in 2024 with fiscal and monetary tightening. Sri Lanka must address longstanding structural issues to resolve its economic crisis.


Southeast Asia

Growth resumed in late 2022 with the reopening of borders and easing of travel restrictions. Inflation surged because of supply chain disruption. Growth is forecast to rise in the medium term with higher production of petroleum and chemical products. Inflation should ease as global supply conditions normalize. A significant challenge is diversifying the economy to ensure more balanced sources of future growth.

Strong export growth and tourism recovery accelerated growth in 2022 and shrank the current account deficit. Inflation peaked in mid-2022 on surging prices for imported goods but decelerated in the second half of the year. Growth is projected to accelerate this year and next, supported by continued tourism recovery, but inflation will moderate. Cambodia needs to scale up green investment in strategic priority areas to unlock its long-term growth potential.

Growth rose in 2022. Exports boomed, supporting growth and generating windfall fiscal revenues. Higher commodity prices raised inflation—not as much as expected but enough to dampen consumption and investment and spur monetary tightening. External debt inflows decreased, foreign reserves fell, and the rupiah weakened. For 2023, slower global growth will contain exports and growth. For the medium term, repairing the impact of the recession will be challenging.

Gradual economic recovery continued in 2022, benefiting from border reopening and improved mobility. Recovery in services will likely continue to drive growth this year and next. Currency depreciation in 2022 will keep inflation high in 2023, particularly for food and fuel, dampening household purchasing power. Rising wages in neighboring countries are incentivizing workers to migrate out of the Lao People’s Democratic Republic (Lao PDR), which poses challenges for economic recovery.

Growth exceeded expectations in 2022, buoyed by strong domestic consumption and a rebound in services as borders reopened and economic activity normalized. Inflation remained broadly muted, dampened by government subsidies and price controls. A less accommodative monetary stance was adopted in response to higher global interest rates. Growth is expected to moderate, and inflation to decelerate, in 2023 and 2024, mainly tracking changes in the global environment. Malaysia should promote gender-inclusive policies to boost women’s participation in the labor market.

The economy continued to be weighed down in fiscal 2022 by instability and volatility. These factors will likely persist in the near term, along with high inflation and real growth languishing below potential. The economic downturn has stretched household incomes and hampered access to food, such that malnutrition is becoming more prevalent nationwide. The cumulative impact of this situation has taken a heavy toll on the poor, posing major challenges to social protection programs.

Robust investment and consumption drove high GDP growth in 2022. Growth is projected to moderate but will still be strong at 6.0% this year and 6.2% next. A recent buildup of inflationary pressure will moderate next year as tighter monetary policy takes effect. The current account will continue to post deficits partly because of brisk imports of investment goods. Strengthening food security is vital to ensuring inclusive growth.

GDP growth slowed in 2022 as expansion in all sectors moderated and contributions from net exports and investment fell sharply. Inflation accelerated as food and energy prices rose. Growth should moderate further this year on softer external demand but improve in 2024. Inflation will be on a downward trend to the forecast horizon, contained by the lagged effect of monetary tightening. A comprehensive fiscal policy package should be designed to support a planned move toward low carbon transition while safeguarding competitiveness.

The Thai economy continued to expand in 2022 due to robust private consumption and tourism recovery. Tourism and private consumption are expected to be the main growth drivers in 2023–2024. However, a global economic slowdown may derail the Thai economy from its recovery path as risks are tilted to the downside. Transitioning to a net-zero carbon emissions economy is a policy challenge, but the economy is highly vulnerable to global climate change.

The economy recovered in 2022 on increased government expenditure and a rebound in private consumption. It will likely sustain similar growth rates in 2023 and 2024 with public spending continuing as the main growth driver in the medium term. Inflation nearly doubled in 2022 but is forecast to ease this year and next. A major challenge is to ensure cost-effective, high-quality investment in human capital accumulation to allow the rising generation to put Timor-Leste on a sustainable, resilient growth path.

Economic recovery was impressive in 2022, supported by exports, robust foreign direct investment, and rebounding domestic consumption. The pandemic nevertheless exposed structural issues that are among the main downside risks to the economy. Growth is forecast to moderate in the coming 2 years, and inflation is expected to edge up. A particular challenge is managing problems that have built up in the financial sector, including a proliferation in nonperforming loans.


The Pacific

Tourism led strong recovery in 2022. While arrivals were only 71% of pre-pandemic levels, visitors stayed longer and spent more. Positive effects spilled over into transport and wholesale and retail trade. Credit from commercial banks increased as confidence strengthened. Remittances reached record levels. Revenue increased, but higher debt stock will likely constrain fiscal space. Inflation accelerated in tandem with commodity price trends and domestic demand. Economic expansion is projected to moderate from 2023 as brain drain drags on growth.

Growth rebounded in 2022 on normalizing economic activity, higher resource output, and commodity price spikes triggered by the Russian invasion of Ukraine. Recovery is forecast to continue at a moderate pace in 2023 and 2024, supported by expansion of the non-resource sector. Petroleum and gas output will likely contract, narrowing the current account surplus. Inflation is forecast to subside in line with global trends. Operationalizing the sovereign wealth fund would strengthen resource revenue management and macroeconomic stability.

Restrictions to contain COVID-19 brought the worst economic contraction in over 2 decades. Lower log output and higher international commodity prices pushed the current account deficit higher. Economic recovery in 2023 will be buoyed mainly by public investment and consumer spending tied to hosting the Pacific Games. While inflation is expected to ease slightly in 2023, the current account deficit is projected to rise further as imports accelerate. Finance and tax reform are laying the foundation for broad-based growth.

Economic recovery continued in 2022 with border reopening in the second half. Inflation accelerated, and higher global commodity prices drove the current account balance into deficit. Growth is expected to slow in 2023 because of cyclone and earthquake damage to crops and infrastructure, which is seen to keep inflation elevated and the current account in deficit. Facing labor shortages, the new government needs to balance competing demand for skilled workers in tourism at home and for seasonal worker schemes abroad.

Three years into the pandemic, Central Pacific economies have started on the road to recovery. Growth is gradually accelerating in Kiribati but moderated last year in Nauru and Tuvalu. A surge in global commodity prices since the Russian invasion of Ukraine translated into higher inflation across the Central Pacific. While all three economies are expected to grow with mostly moderate inflation over the forecast horizon, the external environment will significantly influence both indicators.


Economic growth was sustained in 2022 by the resumption of infrastructure projects and higher social protection spending. Growth is forecast to accelerate in 2023 and 2024 as recovery gains traction. Inflation accelerated in 2022 and will likely remain elevated in the next 2 years.


Economic growth slowed as the future of the Regional Processing Centre (RPC) remained unclear. Growth is expected to edge up to 1.8% in FY2023 and 2.2% in FY2024 on infrastructure projects jointly funded with development partners. Inflation accelerated in FY2022 and is expected to rise further in FY2023 before easing in FY2024.


Growth moderated in 2022 under external and domestic shocks. Faster growth is expected to the forecast horizon, driven by more infrastructure projects and the reopening of borders. Inflation accelerated in 2022 but will likely slow in 2023 and 2024.

Pandemic impacts began to dissipate in the Federated States of Micronesia and the Marshall Islands, but contraction continued in Palau. Recovery is expected with border reopening and incipient revival in Palau’s key tourism markets. Inflation will be driven by high international commodity prices, but effects will differ in each economy. The anticipated renewal of compacts with the US brightens economic and fiscal prospects but requires strengthened implementation capacity and public financial management.

Federated States of Micronesia

The economy has started to recover from the COVID-19 pandemic. Inflation accelerated on higher import prices and stronger economic activity. Sustained recovery is expected to bring the economy back to its pre-pandemic level.

Marshall Islands

Inflation was lower than elsewhere in the subregion, but price pressures increased. Grants declined, causing a fiscal deficit.


The economy contracted for a seventh consecutive year. Limited flight connections constrained recovery in tourism. Inflation reached a historic high on elevated international commodity prices, and will likely ease but remain elevated.

The Cook Islands, Niue, Samoa, and Tonga have struggled to recover from 3 years of economic disruption. In all four countries, GDP in fiscal year 2022 (FY2022, ended 30 June 2022) languished lower than in FY2019, tourism recovery was uneven, and labor supply issues came to the fore. Public expenditure will provide some stimulus, but fiscal positions will be mixed in the medium term. Remittances to Samoa and Tonga may help households grapple with rising inflation.

Cook Islands

The economy rebounded in FY2022 by 10.5% following sharp contraction in FY2021. Growth is forecast at 11.2% in FY2023 and 9.1% in FY2024. Inflation increased in FY2022 and is expected to rise further before falling back to trend in FY2024.


The economy likely contracted for a third consecutive year in FY2022 as tourism remained below pre-pandemic levels. The impact of recent import price movements is unknown for lack of inflation data.


The economy shrank for a third year in FY2022, by 6.0%. GDP may rebound in FY2023 from a low base, but medium-term prospects are mixed. Inflation is forecast to increase from 8.8% in FY2022 to 10.2% in FY2023.


Disasters and COVID-19 further shrank GDP in FY2022. Easing mobility restrictions and revived public investment will likely expand GDP by 2.5% in FY2023. Inflation is forecast to accelerate further from 8.5% in FY2022 to 9.4% in FY2023.