Growth will be driven by continued trade expansion, the faster-than-expected recovery of manufacturing, domestic travel and the disbursement of public investment, according to the ADB’s ADO Supplement July 2022 released on July 21.
Surging global commodity prices, especially global oil prices, would increase inflationary pressure. However, the abundance of domestic food supply in Vietnam would help ease inflation in 2022.
The inflation forecast is therefore unchanged at 3.8% for 2022 and 4.0% for 2023 compared with ADB’s projection in April.
The report said developing Asia and the Pacific is continuing its recovery from the COVID-19 pandemic. Many countries are easing mobility restrictions, which is strengthening economic activity. However, growth has slowed in China, the region’s largest economy, due to disruption from new COVID-19 lockdowns, as well as weaker global demand.
So the ADB lowered its economic growth forecast for the region to 4.6% this year due to slower expansion in China, more aggressive monetary tightening in advanced economies, and fallout from the continued Russia-Ukraine tension.
The outlook compares with a projection of 5.2% issued by ADB in April. The bank also raised its forecast for inflation in the region, amid higher prices for food and fuel.
“The economic impact of the pandemic has declined across most of Asia, but we’re far from a full and sustainable recovery,” said ADB Chief Economist Albert Park. “On top of the slowdown in China, fallout from the war in Ukraine has added to inflationary pressure that’s causing central banks around the world to raise interest rates, acting as a brake on growth.
“It’s crucial to address all these global uncertainties, which continue to pose risks to the region’s Recovery,” he said.