China’s recovery from the pandemic and strong demand in India will drive strong economic growth in Asia this year, the Asian Development Bank said in a report issued Tuesday.
The Manila, Philippines-based ADB’s latest update forecasts an expansion of 4.8% in this year and the next, up from 4.2% in 2022. It said inflation would likely cool slightly this year and fall further in 2024.
ADB economists said a weekend decision by oil producing nations to cut output, pushing oil prices sharply higher, might reignite inflationary pressures and add to challenges for the region.
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.
Oil prices remain below that level, with Brent at $83 on Monday. But they soared about 5% after Saudi Arabia and other major oil producers said they will cut production by 1.15 million barrels per day from May until the end of the year, on top of a reduction announced last October that infuriated the Biden administration.
“It’s certainly plausible that oil prices could go even higher and introduce another challenge for the region,” ADB Chief Economist Albert Park said in a conference call.
However, growing imports of Russian crude oil, especially by China and India, will likely cushion the impact of rising prices — such exports to China, India and Turkey more than doubled last year.
As of February, a third of Russia’s crude exports were going to India and more than a fifth to China.
Park noted that inflation in Asia seems to be driven more by surging demand for services, such as tourism, than for goods.
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