China’s property crisis: ADB warns of “intensified” risks for developing Asia

The Asian Development Bank (ADB) stated on Wednesday that economic growth in developing Asia will be somewhat weaker than predicted this year due to deterioration in China’s property sector and El Niño-related concerns clouding regional prospects.

In an update to its regional economic outlook, the ADB reduced its 2023 growth prediction for developing Asia to 4.7%, down from 4.8% in July.

However, the grouping’s GDP prediction for next year, which includes 46 Asian nations but excludes Japan, Australia, and New Zealand, was raised slightly higher to 4.8% from 4.7% earlier.

“We expect robust growth in the area based on fairly strong domestic consumption and investment, notwithstanding weaker external demand, which dampens export-driven growth,” Albert Park, ADB’s chief economist, said at a news conference.

The Asian Development Bank lowered its growth expectations for East Asia, South Asia, and Southeast Asia this year, with China and India predicted to expand 4.9% and 6.3%, respectively, somewhat lower than the 5.0% and 6.4% projected in July.

The ADB noted in its study that China’s property crisis “poses a downside risk and might stifle regional growth.”

The Manila-based lender kept its growth predictions for China and India at 4.5% and 6.7%, respectively, for 2024.

While development in developing Asia has been solid so far and inflationary pressures are easing, Park warned that governments must remain watchful in the face of the region’s numerous difficulties, including food security.

In emerging Asia, inflation is expected to fall to 3.6% this year, from 4.4% last year, and continue to fall to 3.5% in 2024, allowing central banks more policy room, according to the ADB, but interest rate rising and lowering cycles will vary in the future.