KATHMANDU: The Asian Development Bank (ADB) has revised down the growth forecast of Asia to 4.2 percent and 4.6 percent for the years 2022 and 2023 respectively stating that recurrent lockdowns in China, the Russian invasion of Ukraine are key factors behind the slowing global growth. Releasing the ‘Asian Development Outlook’ on Thursday, the ADB states that the South Asian forecast for 2022 is maintained at 6.5 percent but revised down marginally for 2023 from 6.5 percent to 6.3 percent following a slowdown in Bangladesh and flooding in Pakistan. The ADB, however, upgraded the forecast for South East Asia for 2022 from 5.1 percent to 5.5 percent on robust consumption and tourism recovery in Malaysia, the Philippines, Thailand, and Viet Nam. But the 2023 forecast is revised down to 4.7 percent as global demand weakens. Similarly, growth prospects in the Caucasus and Central Asia are adjusted up from 3.9 percent to 4.8 percent in 2022 as ‘spillover from the Russian invasion of Ukraine has been more benign than expected’.
The report also states that the growth forecast for the Pacific in 2022 has also been revised from 4.7 percent to 5.3 percent on a strong tourism rebound in Fiji.
Likewise, regional inflation forecasts are revised down slightly for 2022 from 4.5 percent to 4.4 percent but upgraded for 2023 from 4.0 percent to 4.2 percent. “Even with outlook deterioration, developing Asia will grow more than other regions and suffer less inflation than most,” said the report adding that multiple risks abound as the three main headwinds could worsen, along with geopolitical risks and climate change. The inflation projection for South Asia is increased marginally for 2022 from 8.1 percent to 8.2 percent and more substantially for 2023 from 7.4 percent to 7.9 percent. The sub-regional revision for 2023 largely reflects a higher inflation forecast for Bangladesh, Nepal, Pakistan, and Sri Lanka. Inflation forecasts for elsewhere in the sub-region in 2023 remain unchanged. Inflation in India is still expected to rise to 6.7 in 2022 n before falling back to 5.8 percent.
The growth forecast for Nepal put unchanged for year 2023 in line with the projection, with domestic demand stymied by a tight monetary policy implemented to stem inflation and rising imports, which have depleted foreign exchange reserves. “ Nepal’s fiscal policy enunciated in the budget speech for 2023 is somewhat expansionary, aiming to strengthen agriculture, industry, infrastructure development, and social protection,” report states.