KUALA LUMPUR (Sept 21): The Asian Development Bank (ADB) has again lowered its forecasts for economic growth in developing Asia and the Pacific, amid mounting challenges that include increased monetary tightening by central banks, fallout from the protracted Russian invasion of Ukraine, and recurrent Covid-19 lockdowns in China.

In a statement on Wednesday (Sept 21), the bank said the region’s economy is expected to grow 4.3% this year, compared with the bank’s projection in April of a 5.2% expansion, according to an update of the Asian Development Outlook (ADO) 2022.

It said the growth forecast for next year has been lowered to 4.9% from 5.3%, while the region’s inflation forecast has been raised.

Excluding China, the rest of developing Asia is projected to grow by 5.3% in both 2022 and 2023.

ADB said domestic consumer spending and investment are driving growth as economies in the region continue to relax pandemic restrictions, thanks in part to vaccination drives and declining Covid-19 mortality.

However, it said the continuing invasion of Ukraine has heightened global uncertainty, worsened supply disruptions, and unsettled energy and food markets​.

More aggressive monetary tightening by the US Federal Reserve and the European Central Bank is denting global demand and rattling financial markets.

Meanwhile, sporadic Covid-19 outbreaks and new lockdowns have slowed growth in the PRC, the region’s largest economy.

ADB chief economist Albert Park said developing Asia continues to recover, but risks loom large.

“A significant downturn in the world economy would severely undermine demand for the region’s exports.

Stronger-than-expected monetary tightening in advanced economies could lead to financial instability.

“And growth in China faces challenges from recurrent lockdowns and a weak property sector.

“Governments in developing Asia need to remain vigilant against these risks and take the necessary steps to contain inflation without derailing growth,” he said.