Strong demand in India and China’s recovery from the pandemic will be factors for strong economic growth in Asia this year. The Asian Development Bank (ADB) said this in a report released on Tuesday. It said that Asia will grow at 4.8 per cent this year and next, up from 4.2 per cent in 2022.
In a recent forecast, ADB said that inflation is expected to come down this year and will be even lower in 2024. However, economists at the institute say that the decision to reduce production by oil-producing countries could lead to a rise in oil prices, which would further increase inflationary pressures, which is going to be a challenge for the region.
The report’s analysis is based on the assumption that Brent crude oil will remain at $88 per barrel this year and $90 per barrel next year. Oil prices remained below this level, on Monday it was $83 per barrel. But prices rose by five per cent after major oil-producing countries, including Saudi Arabia, announced production cuts.
Albert Park, chief economist at ADB, said, “Oil prices could rise further, which would pose another challenge for the sector.” He said inflation in Asia would depend more on rising demand for services such as tourism, rather than goods. Another factor driving up prices will be China’s shift from slower growth to faster growth as Covid-19 restrictions are lifted there.
ADB estimates that China’s economy will grow by five percent this year and 4.5 percent next year. Last year it was three per cent. Although India’s economy is estimated to grow at a rate of 6.4 percent this year. This figure was 9.1 percent in 2021 and 6.8 percent last year.
