MANILA, Philippines – Developing Asia faces “intensified” risks from China’s troubled real estate sector and high interest rates around the world, the Asian Development Bank said Wednesday, as it downgraded its regional growth expectations.
Gross domestic product is expected to grow 4.7 percent this year, the Manila-based lender said, slightly lower than April’s estimate of 4.8 percent.
That was faster than last year’s growth of 4.3 percent.
“Developing Asia” refers to the multilateral lender’s 46 emerging economies, stretching from Kazakhstan in Central Asia to the Cook Islands in the Pacific.
“Risks to the outlook have increased,” the bank said in its latest update to forecasts for this year and next year, noting that weaknesses in China’s real estate sector “could hold back regional growth.”
Other challenges included high interest rates and threats to food security posed by the El Nino weather phenomenon and export restrictions imposed by some countries.
Inflation is also expected to fall to 3.6 percent this year from 4.4 percent last year, the ADB said, pointing to the slowdown in China.
The bank cut its China inflation estimate for this year to 0.7 percent, down from the April forecast of 2.2 percent.
There was an outpouring of consumer exuberance after China, the world’s second-largest economy, lifted its strict zero-Covid policy late last year.
But weak consumption, a crisis in the huge real estate sector and weak demand for Chinese exports have hampered the recovery.
Official figures show that China briefly entered deflation in July for the first time in more than two years, with prices falling by 0.3 percent on an annual basis. The next month it recovered.
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