The Asian Development Bank (ADB) updated its 2023 growth projection for South Asia to 5.7%, citing India’s stronger-than-expected economic performance. The forecast for 2024 remains steady at 6%. Despite global challenges, the economic outlook for developing Asia is optimistic.
Growth forecasts for the South Asia subregion for 2024 are maintained at 6% despite downward revisions in the forecasts for Bangladesh and Maldives. The 2024 growth projections for the subregion’s other economies are unchanged.
The 2023 growth forecast for developing Asia has been revised upwards to 4.9%, an increase from the previously projected 4.7% in the Asian Development Outlook of September 2023. This revision is attributed to strong domestic demand. The growth forecast for 2024 is consistent at 4.8%.
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Inflation in developing Asia is expected to decrease, falling from 4.4% in the previous year to an adjusted 3.5% this year. It is projected to experience a slight increase to 3.6% in 2024.
ADB Chief Economist Albert Park remarked, “Despite the challenging global environment, Developing Asia continues to exhibit robust growth. The region is also gradually bringing inflation under control. However, risks persist, ranging from high global interest rates to climate-related events like El Niño. It is crucial for governments in Asia and the Pacific to stay alert and ensure their economies are resilient and that growth is sustainable.”
The inflation forecast for South Asia is unchanged at 8.6% for 2023, but revised up to 6.7% for 2024.
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This revision reflects higher inflation forecasts for Bangladesh and Nepal.
Despite several efforts to reduce inflation, the monthly rate in Bangladesh was close to double digits in July–October due to rising food inflation.
Inflation is expected to ease in the coming months on continued contractionary monetary policy, measures taken to secure a market-based exchange rate, lower global commodity prices, and a better crop outlook.
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The inflation forecast for Nepal in 2024 is revised up due to continued pressure on prices and the assumption of higher international oil prices in 2024.
The inflation forecast for Maldives for 2023 is reduced slightly, as Q3’s average inflation rate was lower than projected earlier.
Potential downside risks include prolonged high interest rates in advanced economies, possibly leading to financial instability. Additionally, supply disruptions from events such as El Niño and the ongoing Russian invasion of Ukraine could pose renewed challenges in energy and food security, potentially reigniting inflation, the ADB warns.