ADB’s report reveals strong growth forecast for Asia’s developing economies, highlighting risks from U.S. tariffs.
Developing Asian economies are expected to grow by 5.0% this year, thanks to a strong U.S. economy and a growing demand for computer chips used in AI, according to the Asian Development Bank (ADB) on Wednesday.
This is an upgrade from their earlier estimate of 4.9%.
However, the ADB warns that protectionist policies, like higher tariffs on Chinese exports, could increase if the U.S. presidential election results in protectionist policies.
The ADB highlights positive trends, such as a rise in Asia’s computer chip and electronics exports due to AI adoption, stable energy and food prices, and a growing demand for semiconductors.
However, inflation remains a concern in some countries, and the election outcome could lead to trade tensions and affect developing Asia’s economy and financial stability.
Asian Development Bank raises growth forecast for region, but warns of risks from trade sanctions https://t.co/z5QH16JViI
— The Associated Press (@AP) September 25, 2024
The report also notes that China and South Korea are seeing strong growth in their exports, especially in the automotive sector.
The U.S. election could lead to tariffs on all imports, affecting trade between the U.S. and China and potentially harming developing Asia.
China’s struggling property market is also a concern, but the ADB expects China’s economy to grow by 4.8% in 2024 and 4.5% in 2025.
The ADB Chief Economist, Albert Park, is optimistic about recent Chinese actions to lower borrowing costs and boost home purchases but notes the effectiveness of these measures is uncertain.
Despite these challenges, the ADB notes that energy inflation has returned to pre-pandemic levels and food inflation is declining, with rice prices dropping significantly.
The La Nina climate could bring good rainfall for crops but also pose risks of flooding.