Asian Development Outlook (ADO) December 2023: Growth Upbeat, Price Pressures Easing

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Healthy domestic demand, strong remittances, and recovering tourism are underpinning economic activity, which continued to expand even as inflation moderated. These drivers offset the drag from a worsening export performance and the lagged effects of monetary policy tightening, and they are expected to continue fostering growth in the region in 2024. Downside risks are mainly associated with higher-for-longer interest rates in advanced economies. Possible supply disruptions from El Niño and the Russian invasion of Ukraine could renew energy and food security challenges and rekindle inflation.

Highlights

• Developing Asia’s outlook remains solid despite global challenges. The 2023 growth forecast is revised up from Asian Development Outlook September 2023’s projection, to 4.9% from 4.7%, on robust domestic demand. The 2024 forecast is maintained at 4.8%.
• East Asia’s growth forecast for 2023 is revised up to 4.7% on higher-than expected third quarter growth in the People’s Republic of China. The forecast for 2024 is maintained at 4.2%.
• South Asia’s projection is revised up to 5.7% for 2023, driven by stronger than-expected growth in India, and is unchanged at 6.0% for 2024.
• Growth forecasts for Southeast Asia are revised down to 4.3% for 2023 and 4.7% for 2024, mainly on weak external demand.
• The Caucasus and Central Asia’s 2023 outlook has improved, with growth now forecast at 4.8% primarily on expectations of faster growth in Kazakhstan. The 2024 forecast is revised down slightly to 4.6%.
• The Pacific’s growth projections are unchanged at 3.5% for 2023 and 2.9% for 2024, on the continued recovery of international tourism and the resumption of public infrastructure projects.
• Developing Asia’s inflation is forecast to decline from 4.4% last year to a downward-adjusted 3.5% this year, before rising slightly to 3.6% in 2024.
• Downside risks are mainly associated with higher-for-longer interest rates in advanced economies, which could trigger financial instability. Possible supply disruptions from El Niño and the Russian invasion of Ukraine could renew energy and food security challenges, and rekindle inflation.