The multilateral lender based in Manila now expects the region to grow 4.6% in 2022, lower than its previous estimate of 5.2%.
In a new report, ADB cited China’s Covid-19 lockdowns as well as monetary tightening and Russia’s invasion of Ukraine as factors dragging down Asian gross domestic product (GDP) growth.
The bank noted that while many countries have eased pandemic-related restrictions, strengthening economic activity, China growth had slowed due to disruption from new lockdowns.
The China downgrade comes as senior Chinese officials have said its target of 5.5% GDP growth is unlikely.
ADB also reduced growth estimates for East Asia ex Japan, covering South Korea and Taiwan as well as China, to 3.8% from 4.7%.
South Asia Forecast Lowered to 6.5%
South Asia’s growth forecast was lowered from 7.0% to 6.5% for 2022 and from 7.4% to 7.1% for 2023, mainly due to the economic crisis in Sri Lanka and high inflation and associated monetary tightening in India.
“The economic impact of the pandemic has declined across most of Asia, but we’re far from a full and sustainable recovery,” said ADB chief economist Albert Park.
“On top of the slowdown in [China], fallout from the war in Ukraine has added to inflationary pressure that’s causing central banks around the world to raise interest rates, acting as a brake on growth.”
The outlook for Southeast Asia was raised to 5.0% this year from 4.9% amid increased domestic demand due to more relaxed Covid-19 restrictions.
The forecast for the Caucasus and Central Asia was raised to 3.8% from 3.6% and in the Pacific, rebounding tourism in Fiji helped the subregion’s growth outlook improve to 4.7% from 3.9%.