The Asian Development Bank (ADB) has raised its growth forecast for developing Asia, citing a stronger-than-expected rebound in China's economy. The bank now predicts that the region will grow by 4.8 percent this year, up from its previous projection of 4.6 percent in December.
In comparison, developing Asia grew at a rate of 4.2 percent last year. The ADB expects economic growth of about half of the region's growth and projects that China's gross domestic product will rise by five percent this year and 4.5 percent in 2024.
South Asia is expected to record the fastest pace of growth in the region, with India projected to expand by 6.4 percent on “healthy domestic demand.” However, the ADB warned that an escalation in Russia’s invasion of Ukraine could fuel inflation and lead to further interest rate hikes.
Excluding China, the rest of the region is expected to grow at a faster rate than previously predicted – 5.6% this year – with South Asia leading with an expansion rate of 5.5%.
Despite these positive projections, challenges remain for developing economies as turbulence in global banking sectors and geopolitical tensions threaten stability.
Furthermore, OPEC+'s surprise announcement regarding production cuts introduces another challenge for these economies as it could potentially drive oil prices higher which would have significant implications for businesses across various industries within these regions.