(CTN News) – It was reported on Wednesday that the Asian Development Bank had cut its inflation forecast for developing Asia by 0.2% as food and fuel prices eased, supply chain disruptions decreased, and interest rate hikes
An analysis conducted by the Philippines-based lender revealed that the inflation rate is headed back to pre-Covid levels, which have squeezed household budgets and left millions of poor households struggling to put food on the table.
The bank said in its flagship outlook report that it expects inflation to be 3.6 percent this year, compared to its previous forecast of 4.2 percent, which was due to sharply falling prices in China, according to the report.
A developing market in Asia refers to any of 46 emerging economies that are members of the multilateral lender, ranging from Kazakhstan in Central Asia to the Cook Islands in the Pacific Ocean.
ADB has kept its economic growth Inflation forecast for 2023 at 4.8 percent, according to the ADB, citing robust consumption, tourism and investment, despite a decline in global demand for the region’s exports.
According to the bank, there was still a possibility that its forecast could rise further.
The ADB stated that if inflation is tamed more quickly than currently expected in advanced economies, that would likely result in the authorities there adopting a more dovish monetary policy, which would support economic growth in the region.
Meanwhile, the lender warned that an escalation in Russia’s invasion of Ukraine could contribute to price hikes, while the return of the El Nino weather phenomenon could negatively affect the economy this year as well.
As the bank noted, the tide was also turning in terms of interest rates at the moment.
As a result of lower inflation in developing Asia and a more moderate monetary tightening in the United States this year, most central banks in the region have kept policy rates steady this year, with a number of indicators indicating a shift toward looser monetary policy moving forward.
It is still expected that China’s economic growth will be five percent this year and four percent in 2024, according to the bank, citing monetary and fiscal policies that have been supportive of the economy.