ADB – Asian Development Outlook September, 2023

The Asian Development Outlook for September 2023 highlights continued economic growth in developing Asia, driven by healthy domestic demand and the reopening of the region's largest economy, China. T he report notes that rising consumption in China and robust public investment in India have supported growth in the first half of the year. Other economies in the region are also experiencing strong domestic demand as economic activity gradually returns to normal following the pandemic. However, the report also points out that a slowdown in global demand is impacting exports in the region, particularly for electronics and semiconductors. Weak external demand has also depressed industrial production in high-income technology-exporting economies. On a positive note, tourism is showing signs of recovery, with visitor arrivals reaching pre-pandemic levels in many economies. Remittances and money transfers to developing Asia remain stable, although there has been a slight decline in money transfers to the Caucasus and Central Asia. In terms of monetary policy, central banks in the region have mostly held rates this year, as inflationary pressures weaken. The report mentions that inflation is slowing at different rates across the region and is now within the target range for some economies. Financial market conditions have improved since the beginning of the year, supported by easing inflation and expectations of less aggressive monetary policy tightening by the US Federal Reserve. The report revises down the region's growth forecast for 2023 to 4.7%. There are also downward revisions for the growth forecasts of certain countries and subregions, primarily due to weaker global demand for manufactured exports. Inflation in developing Asia is forecasted to decline from 4.4% last year to 3.6% in 2023. The report highlights some risks to the outlook, including the downside risk posed by China's property market and the elevated financial stability risks due to high interest rates. Food security is also a challenge, with the effects of El Niño, food supply disruptions from the Russian invasion of Ukraine, and restrictions on food exports by some economies. Geopolitics, global production disruptions, inflation dynamics, and the monetary policy stance of advanced economies are also factors that could shape the global outlook.