According to the latest Asian Development Outlook (ADO), shifts in U.S. trade, fiscal, and immigration policies could affect growth and inflation dynamics across the region.
Slight dip in growth, lower inflation
Developing Asia and the Pacific are forecast to grow by 4.9 percent in 2024, a slight dip from the earlier estimate of 5 percent. Growth for 2025 is expected at 4.8 percent, with weaker domestic demand in South Asia driving the revision.
Inflation forecasts have been trimmed to 2.7 percent for 2024 and 2.6 percent for 2025, partly due to an expected moderation in oil prices.
Outlook for SE Asia
Southeast Asia’s growth outlook has been raised to 4.7 percent this year from a previous forecast of 4.5 percent , driven by stronger manufacturing exports and public capital spending. The forecast for next year is unchanged at 4.7 percent.
For the Philippines, the growth forecast was maintained at 6 percent for 2024 and 6.2 percent for 2025.
ADB sees inflation in the Philippines settling at 3.3 percent, lower than its earlier forecast of 3.6 percent, in 2024. This is seen to go slightly down to 3.2 percent in 2025.
“Strong overall domestic demand and exports continue to drive economic expansion in our region,” said ADB chief economist Albert Park. “However, the policies expected to be implemented by the new US administration could slow growth and boost inflation to some extent in the People’s Republic of China (PRC), most likely after next year, also impacting other economies in Asia and the Pacific.”
High-risk scenario
Under a high-risk scenario, aggressive U.S. tariffs and reduced immigration could erode global growth by 0.5 percentage points over four years. However, ADB notes that the impacts on developing Asia and the Pacific would remain relatively contained, with potential trade diversions and production shifts mitigating adverse effects.
While the PRC’s growth outlook remains steady at 4.8 percent for 2024, India’s forecast has been adjusted downward to 6.5 percent due to subdued private investment. Southeast Asia’s growth is expected to rise to 4.7 percent, fueled by strong exports and public spending.
ADB remains focused on fostering resilience and sustainability in the region, underscoring its commitment to eradicating poverty and promoting inclusive growth. --Ed: CSN
