India, China Set For Faster Growth in 2023, Forecasts ADB

The Asian Development Bank (ADB) stated in a report that China's recovery from the pandemic, combined with strong demand in India, will drive strong economic growth in Asia this year. Asia's developing economies are on track for faster growth and lower inflation this year and next, even as advanced economies contribute to a bleaker global outlook, according to the report.

The continent's 46 member countries are expected to grow at a rate of 4.8% in 2023 and 2024, up from 4.2% last year, according to an update to the ADB's regional forecasts released. Inflation is expected to fall to 4.2% this year, down from 4.4% in 2022.

The reopening of China looms large in the group's projections, with the ADB expecting additional knock-on effects to growth, including increased tourist arrivals throughout the region. According to ADB analysts, the world's second largest economy has also had well-managed inflation due to the lack of large stimulus packages and broadly balanced demand and supply.

The ADB predicts that China's economy will grow 5% this year and 4.5% next year, up from 3% last year but slower than the country's long-term average.

However, inflation risks are skewed to the higher side, according to ADB analysts, particularly in light of OPEC+'s surprise announcement to cut production by one million barrels.

This year, India's economy is expected to grow at a slower rate of 6.4%. This follows a 9.1% annual rate of growth in 2021 as the economy recovered from the worst of the pandemic, and 6.8% last year. However, it is one of the fastest growing major regional economies.

However, rising Russian crude oil imports, particularly from China and India, will likely mitigate the impact of rising prices; such exports to China, India, and Turkey more than doubled last year.

“We anticipated that supply would remain somewhat constrained this year," given higher demand from China amid its rebound, said Albert Park, ADB chief economist. Having penciled in an oil-price average of $88 a barrel this year and $90 in 2024 before OPEC’s production cut, “it’s certainly plausible oil prices could go even higher," he said. The report's analysis was based on the assumption that Brent crude oil, the pricing basis for international trading, would average $88 a barrel this year and $90 a barrel next year.