Developing Asia is on track to grow 5pc this year, says ADB

Developing Asia is on track to grow 5 per cent this year, supported by strong consumption and high demand for tech exports, the Asian Development Bank (ADB) forecast on Wednesday, and said China was expected to roll out more economic support measures.

In an update to its Asian Development Outlook report, the ADB left most growth projections for economies in the region unchanged from its July report, maintaining its growth outlook for developing Asia at 5.0 per cent this year and 4.9 per cent next year.

It revised down its inflation forecasts for developing Asia, which groups 46 countries in the Asia-Pacific, to 2.8 per cent for this year and 2.9 per cent for next year from previous forecasts of 2.9 per cent and 3.0 per cent, respectively.

The Manila-based lender highlighted some downside risks to its outlook, including rising protectionism, escalating geopolitical tensions, adverse weather conditions, and a deterioration in China's property market.

China, the world's second-largest economy, is battling deflationary pressures, and struggling to lift growth despite a series of policy measures aimed at spurring domestic spending.

On Tuesday, China's central bank announced broad monetary stimulus and property market support measures as authorities look to restore confidence in the economy.

"Whether that will work remains to be seen because a lot of the structural problems in the property sector remain persistent," ADB Chief Economist Albert Park said at a briefing.

"It may take more effort and work by their government" to alleviate concerns of consumers and investors, Park said, adding "more proactive government policy would be helpful."

Park also said the ADB was not so concerned about deflation in China as it sees prices recovering.

Last week, the US Federal Reserve kicked off its own easing cycle with a hefty half-percentage-point rate cut.

"With the Fed's 50 basis point rate cut, central banks have more space to ease, and we expect more of them to do so," Park said.

The ADB kept its 2024 growth forecast for China at 4.8 per cent, below the government's official target of about 5 per cent. Growth for 2025 is still forecast at 4.5 per cent.

"The PRC (People's Republic of China) growth forecast is retained despite the prolonged downturn in the property sector, on the assumption that further fiscal and monetary easing will help sustain the economy," Park said.