ADB lowers growth prediction for Asians as China imposes more lockdowns amid Covid-19

• The Asian Development Bank has lowered its 2022 growth prediction for emerging Asia.
• The Philippine bank cited the impact of Covid-19 lockdowns in China and turmoil in Ukraine.
• It also warned of “global headwinds” to the recovery as food and fuel costs surged.

Wednesday, the Asian Development Bank (ADB) lowered its 2022 growth prediction for emerging Asia, citing the impact of Covid-19 lockdowns in China, the turmoil in Ukraine, and attempts to battle inflation.

While lifting pandemic restrictions had stimulated consumer spending and investment in the area, the Philippine bank warned of “global headwinds” to the recovery as food and fuel costs surged and central banks increased interest rates.

As a result, the bank lowered its growth prediction for developing Asia in 2022 to 4.3%, which refers to the ADB’s 46 member states spanning from the Cook Islands in the Pacific to Kazakhstan in Central Asia.

This is compared to its April prediction of a growth rate of 5.2%. In 2021, the region increased by seven percent.

Albert Park, the chief economist of the Asian Development Bank, warned that “risks loom big” for the region’s economic prospects and encouraged policymakers to stay “vigilant.”

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

“Stronger-than-expected monetary tightening in advanced economies could lead to financial instability. And growth in the PRC (China) faces challenges from recurrent lockdowns and a weak property sector.”

As Beijing pursues a zero-Covid plan that has destroyed the world’s second-largest economy, the growth prediction for China in 2022 has been lowered from 5% to 3.3%.

Ahead of a crucial political summit in October where President Xi Jinping is anticipated to achieve a historic third term, Chinese officials are under pressure to quickly contain even the tiniest virus outbreaks.

Officials have implemented targeted lockdowns and travel restrictions, causing economic disruptions and compelling millions of individuals to remain at home.

The downturn, according to Park, “weighed heavily” on the region’s predictions.

Excluding China from the forecast, the remainder of emerging Asia will expand by 5.3%.

“For the first time in more than three decades, the rest of developing Asia will grow faster than (China),” the ADB noted.

As a result of Russia’s invasion of Ukraine and disruptions in the supply chain, food, and energy prices have risen to 4.5 percent from 3.7 percent, as predicted by the bank.

While monetary officials in the area have raised interest rates, the report suggests that certain central banks may need to do more to curb inflation and avoid capital flight.

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