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The Asian Development Bank lowered its forecast for GDP growth in developing Asia in 2022, saying that China’s zero-tolerance to Covid creates ripple effects on regional supply chains and economic development.
The bank expects the region to grow 4.6% this year compared to its earlier forecast of 5.2%, according to a report Thursday.
It slashed forecast for East Asia — including China, Hong Kong, Taiwan and South Korea – to 3.8% from 4.7%. Growth in China “will be weaker than earlier expected,” the bank said, projecting GDP to expand 4% in 2022, down from an earlier forecast of 5%.
“With many economies in the region increasingly choosing to live with the virus and reopening, economic activity continued to expand in the first half of 2022 — with the notable exception” of China, it said.
Economic risks to Asia are “elevated and mainly associated with external factors,” the bank said, adding that tighter monetary policies from the US Federal Reserve and other major central banks, as well as worsening fallout from Russia’s invasion of Ukraine could hurt growth.
In the region, downside risks could arise from the potentially lingering effects on supply chains from China’s latest round of lockdowns and the country’s growth slowdown, which could hinder developing Asia’s growth momentum, it added.