ADB predicts 4.8% regional growth in 2023

The steep increase in energy price and food price has aggravated balance of payment of couple of vulnerable countries Sri Lanka and Pakistan, and the Asian Development Bank is monitoring and maintains cross communication, especially with IMF and World Bank as to as the most updated economic and financial situation, Masatsugu Asakawa, President Asian Development Bank told the Curtain Raiser interview of the 56th ADB annual sessions yesterday.

“We are very much concerned about the food security issue as the data says that in the region 425 million people were affected by hunger even in 2021, one year before the Russian invasion of Ukraine. So we need to address hunger issues, especially for the poor and vulnerable urgently while developing long term solutions to improve food security issue to that end. The ADB announced $14 billion financial package in September last year, which included both short term measures and long term measures. And short-term measures included very quick dispersing of budget financing through what we call it Counter Technical Support to support our developing member countries (DMCs) to provide food and necessities urgently for the vulnerable and poor. And our long term major measures include investment in the agriculture sector to make the agricultural system in the DMCs more robust and resilient through climate, smart agriculture, nature based solutions and further utilization of digital technology, including supply chains.

He said the economic growth of Asia in 2022 last year was 4.2% down from 7.2% in 2021 and this year in 2023, ADB predicts it around 4.8%, so it went down from two years ago but compared with other part of the world the economic growth rate is relatively high, and the inflation rate is contained relatively low.

“So I would say developing Asia has been growing in a very robust and steady pace, although we have to bear in mind a couple of risks involved. On the economic prospect of advanced countries like the US and Europe, the Fed and the ECB has have raised their policy interest rate a couple of times to quell inflationary pressures. And quite recently, s the US Fed already started to slow down the pace of interest rate hike, but it’s not clear yet whether those advanced economies will end up successfully with so-called soft landing scenario or falling into a recession due to the persistent inflationary pressure in the service sector, and so on. And also this rapid pace of interest rate hike has really tightened global financial conditions from last year, both short term and long term yield has risen, premium has increased and quite recently there were signs of strains in the banking sector in the US and Europe. As a result, the central banks in our region also have started to raise their policy rate, which would strengthen the growth momentum of each country, Asakawa opined.