The Asian Development Bank (ADB) has raised its regional growth forecasts for this year, citing a strong economic recovery in China and India driven by robust domestic demand.
The ADB expects developing Asian economies to expand by 4.9pc this year compared with its previous forecast of 4.7pc in September. It maintains its outlook for next year at 4.8pc.
Developing Asia continues to grow at a robust pace, while inflation in the region is gradually coming under control, ADB's chief economist Albert Park said. "Still, risks remain from elevated global interest rates to climate events such as El Nino."
The ADB forecasts China's economy expanding by 5.2pc this year compared with its previous forecast of 4.9pc after household consumption and public investment boosted growth in the third quarter. It also raised its growth outlook for India to 6.7pc from 6.3pc following faster than expected expansion during July-September, driven by double-digit growth in the industrial sector.
Energy-intensive countries China and India are the region's two biggest economies.
Risks to the growth outlook include persistently elevated interest rates in the US and other advanced economies, which could contribute to financial instability in vulnerable economies in the region, especially those with high debt. "Potential supply disruptions caused by the El Nino weather pattern or the Russian invasion of Ukraine could also rekindle inflation, particularly regarding food and energy," the ADB said.
The bank predicts inflation in the region at 3.5pc this year, lower from an earlier projection of 3.6pc. It raised its inflation forecast for the region to 3.6pc for next year compared with 3.5pc previously.
The ADB's forecasts span central Asia to the Pacific islands, excluding the region's sole major developed economy Japan. The US and Japan are the largest shareholders in the Philippines-based bank, which lends to social and economic projects in the region.
