In a recently released report, the Asian Development Bank (ADB) downgraded its economic growth forecast for Southeast Asia amid a deteriorating global outlook.
In the recently released Asian Development Outlook (ADO) 2022 report, ADB assessed that the Asia-Pacific economy will grow 4.2% this year and 4.6% next year. Meanwhile, the ADB’s September report forecast the region’s economy is expected to grow 43% in 2022 and 4.9% in 2023.
The tightening of monetary policy by central banks globally and in the region, the protracted conflict between Russia and Ukraine, and China’s strict epidemic prevention measures are slowing the recovery of developing Asia after the COVID-19 pandemic.
ADB Chief Economist Albert Park said: “The Asia-Pacific will continue to recover, but deteriorating global conditions mean the recovery will stall as we move into Governments will need to work together more closely to overcome the lingering challenges of COVID-19, countering the impact of high food and energy prices, especially on the poor and vulnerable, and ensure a comprehensive and inclusive economic recovery.”
ADB has lowered its inflation forecast for developing Asia and the Pacific from 4.5% to 4.4% this year. However, the bank raised its forecast for next year from 4.0% to 4.2%, due to persistent inflationary pressures from energy and food prices.
For Southeast Asia, ADB forecasts that the region’s growth in 2022 has been raised from 5.1% to 5.5%, amid a strong recovery in consumption and tourism in Malaysia, Philippines, Thailand and Vietnam. However, the economic growth forecast for Southeast Asia next year is down from 5% to 4.7% due to weak global demand.
Although Vietnam’s economy is performing well in the context of global economic uncertainty, risks to the economic outlook are increasing. ADB raised its economic growth forecast for Vietnam to 7.5% this year. The inflation forecast for 2022 is revised down to 3.5%.
While trade continues to grow, there are signs that global demand for Vietnamese exports is waning. Therefore, Vietnam’s economic growth forecast in 2023 is revised down to 6.3% due to the weakening of major trading partners.
Besides Vietnam, ADB has also lowered the growth forecast for 2023 of other countries in Southeast Asia. Specifically, Malaysia’s economic growth forecast is lowered from 4.7% to 4.3% due to the affected global conditions. Similarly, ADB also lowered its 2023 growth forecast for Singapore, Thailand and Indonesia to 2.3%, 4.2% and 4.8%, respectively.