TEMPO.CO, Jakarta – The Asian Development Bank (ADB) has increased its forecast for economic growth in the developing Asia region and the Pacific in 2024 to 5 percent, amidst solid domestic demand and strong exports.

“The region is projected to grow by 5 percent this year, compared to the earlier projection of 4.9 percent in April,” said ADB Chief Economist Albert Park in Jakarta on Wednesday, September 25, 2024.

In the Asian Development Outlook (ADO) report for September 2024 released today, ADB also lowered the regional inflation forecast. Inflation in the developing Asia region and the Pacific is expected to ease further to 2.8 percent in 2024, compared to the previous forecast of 3.2 percent.

Meanwhile, the economic growth projection for the region in 2025 is maintained at 4.9 percent. Albert mentioned that the improved economic outlook reflects stronger growth than expected in East Asia, the Caucasus, Central Asia, and the Pacific.

The increase in global demand for semiconductors, partly driven by the rapid growth of artificial intelligence, has boosted exports. In contrast, the decline in global food prices and the lagged effects of monetary policy tightening have brought inflation closer to pre-pandemic levels.

“Strong economic fundamentals will continue to support growth this year and beyond,” he said.

Financial conditions are also expected to improve as inflation subsides and monetary policy loosens in the United States, supporting a positive outlook for the region.

Risks to these projections include worsening trade tensions between the United States and China, further downturn in the Chinese property market, escalating geopolitical tensions, as well as the effects of climate change and adverse weather on commodity prices and food and energy security.

Furthermore, the growth projection for China, the largest economy in the developing Asia region and the Pacific, is still maintained at 4.8 percent in 2024 and 4.5 percent in 2025.

The sustained weakness in the Chinese property sector has negatively impacted household spending in 2024. This can be partly offset by higher investments, supported by stimulative monetary and fiscal policies, as well as increased exports.

India, the second largest economy in the region, is projected to grow by 7 percent in 2024, unchanged from the April forecast, amidst strong domestic demand including an increase in government expenditure.

Meanwhile, growth for the Caucasus and Central Asia is expected to rise to 4.7 percent this year, compared to the 4.3 percent projection in April, due to improved domestic demand supported by remittances in several economies.

The growth forecast for the Pacific has been revised upward to 3.4 percent, from the earlier 3.3 percent in April, driven by increasing tourist arrivals. The growth projection for Southeast Asia is lowered by 0.1 percentage points to 4.5 percent due to a decline in public investment and a slower export recovery than expected.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and Pacific, and continues its efforts to eradicate extreme poverty. Established in 1966, ADB is owned by 68 members, with 49 of them in the Asia and Pacific region.

AISHA SHAIDRA | ANTARA

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