Latest news with #AsianDevelopmentOutlook
Mint
06-05-2025
- Business
- Mint
Trump tariffs mixed bag for Asia—excluding China: ADB chief economist
New Delhi: US President Donald Trump's reciprocal tariffs are a mixed bag for Asian economies, other than China, given their opportunity to replace some of China's exports to the US, according to Asian Development Bank (ADB) chief economist Albert Park. Responding to a question from Mint on the sidelines of ADB's 58th annual meeting, Park said that countries could stimulate growth by boosting domestic consumption through support to the vulnerable sections of society as well as through other ways of public spending. ADB in its April 2025 Asian Development Outlook projected a 4.9% growth for the Asia-Pacific region in 2025, and 4.7% for next year. The multilateral agency expects India to grow at 6.7% in 2025-26 and at 6.8% in FY27. These projections reflected the world before the reciprocal tariffs announced by the US administration on 2 April, Park explained. In the December Asian Development Outlook, ADB had projected some scenarios based on announcements of proposed tariffs during Trump's election campaign. The plan then was to impose up to 65% tariffs on China and 10% on the rest of the world. In that analysis, ADB had expected China to be hurt somewhat modestly, but the tariffs finally announced are much higher. 'So, the impact would probably be greater than estimated in that report,' Park said. 'But for other countries in the region, the results are quite mixed because some countries may benefit from being able to replace the reduction in China's exports to the US. That had happened during the first Trump administration, when Vietnam benefited by an increase in their exports.' But companies supplying to China will be hurt if the country's exports decline, he added. 'The other thing is the level of uncertainty that we are seeing today. There's so much uncertainty. I think it's really making it difficult for businesses to make plans to make new investments. We're seeing a slight drop-off in manufacturing in many countries in the region partly because of this. They're not really sure if they will be able to export and at what price (they will be able to do),' Park said. ADB's 2025 growth projection of 4.9% for the Asia-Pacific region is based on strong domestic demand throughout the region, which serves as a counterweight to the external demand shocks, Park said. 'If you cannot get growth by serving overseas demand, then domestic demand is another opportunity,' explained Park. 'Now, how do you do that? I think that will depend on each economy. The main macroeconomic levers include monetary and fiscal policies. But given the current financial volatility, central banks have to be looking pretty carefully at a lot of factors and it may not be so easy to just say, 'Oh, let's lower our interest rate'.' Park proposed using fiscal policy measures to boost domestic demand. 'You could use fiscal policy to boost domestic demand. You could certainly be supporting workers who are vulnerable, who are hurt by the current environment, as a way both to protect vulnerable groups and also to preserve more demand in the economy,' Park said, adding that depending on the gravity of the problem, countries could be more aggressive in public spending. First Published: 6 May 2025, 07:54 PM IST
Express Tribune
12-04-2025
- Business
- Express Tribune
ADB's assessment
Listen to article Pakistan's economic outlook presents a mixed bag of challenges and opportunities, with the country still at a crossroads, grappling with inflation, fiscal deficits and external pressures, says a new report by the Asian Development Bank. But despite the concerns, the report also notes that the country has significant potential for growth and development if strategic measures are put into place. The report, titled Asian Development Outlook, underscores that persistent inflationary pressure has plagued Pakistan's economy for several years, and while some of this is due to our own making, climate events and global supply chain disruptions have taken a heavy toll on the purchasing power of ordinary citizens. Though inflation has declined, the impact it has had on consumer spending and overall economic stability is still visible, and any efforts to address these issues will be further hampered by the global economic turmoil caused by US President Donald Trump's nonsensical, mathematically- and geographically-challenged tariff policy. Trump's policies also threaten any potential foreign direct investment, which is critical for stimulating growth in various sectors. Even the ADB notes that Pakistan needs to diversify its economic base, and no matter how conducive the domestic business environment, global economic turmoil usually scares potential investors. And despite strong progress on IMF loan conditions, including fiscal and monetary reforms, the disorder in global markets threatens the government's ability to plan or borrow, placing additional stress on an underperforming area — tax revenue generation. Unfortunately, the recent past has shown that the government is still intent on using shortcuts, rather than meaningful policy reforms, to increase tax revenue. However, amidst these challenges, there are also signs of hope. The potential for renewable energy, if realised, could lead to a sustainable long-term solution to the circular debt crisis in the power sector, while CPEC could still serve as a catalyst for growth, amid the realignment of global commerce.
Express Tribune
09-04-2025
- Business
- Express Tribune
ADB cuts Pakistan growth to 2.5%
Listen to article The Asian Development Bank (ADB) on Wednesday cut Pakistan's economic growth forecast to 2.5% for this fiscal year, marking the slowest pace in South Asia, and cautioned that any deviation from the hard path of stabilisation could undermine the nascent recovery. The lender also warned that any escalation in political tensions in Pakistan could erode business confidence, potentially hurting investment and growth prospects. In its flagship biannual report, the Asian Development Outlook, the Manila-based agency also lowered Pakistan's inflation projection to 6% for this fiscal yearstill the second-highest rate in South Asia after Bangladesh. The ADB said it finalised the report before new tariffs were announced by President Donald Trump. The World Bank cancelled this week's release of its Pakistan Development Outlook to reassess projections after Trump's announcement. Trump's "liberation day" unilateral tariffs have triggered global uncertainty, retaliation, and fears about the future of the world economy and trade, according to independent economists and trade experts. The ADB noted that the Asia-Pacific region "now faces a complex economic landscape, with increasing trade tensions, policy shifts, and geopolitical conflict." Pakistan's growth is projected to stay at 2.5% in 2025 and rise to 3% in 2026, supported by reforms meant to strengthen private investment. Just three months ago, the ADB had raised the forecast to 3% for the current year, which it has now cut. The 2.5% growth rate is the lowest in South Asia, even lower than war-torn and sanctions-hit Afghanistan. Inflation in Pakistan is anticipated to drop to 6% this fiscal year and 5.8% in 2026, reported the lender, adding that the 6% rate still trails only Bangladesh's 10.2% in the region. The inflation drop is expected to be driven by moderate domestic demand, declining global commodity prices, and a favourable base effect. Core inflation, while easing, remains elevated, it said. However, inflation may rise in the coming months, partly due to planned reforms in the gas sector, including higher gas prices for captive power plants, which will likely raise input costs for these facilities. Overall, the inflation outlook remains exposed to risks from volatile global commodity prices, adverse trade policy shifts, energy tariff adjustments, and additional measures to meet revenue targets. The central bank is expected to adopt a cautious approach to easing monetary policy. Challenges to the outlook The ADB said Pakistan's outlook faces major downside risks. "An improved external position and a quicker-than-anticipated drop in inflation could encourage the government to relax macroeconomic policies, possibly triggering a reemergence of balance-of-payment pressures and jeopardising Pakistan's hard-earned macroeconomic stability." The government also faces internal and private sector pressure to loosen fiscal policies and stimulate growth and jobs. However, any deviation from fiscal consolidation due to weak revenue or spending pressures could raise debt, increase borrowing costs, crowd out private lending, and destabilise the exchange rate. "Debt sustainability risks remain pronounced in the Lao PDR, Maldives, Pakistan, and Sri Lanka," the ADB noted. Policy lapses could threaten disbursements from multilateral and bilateral partners, cutting financial inflows and pressuring the exchange rate. Recovery in business confidence might also weaken if political tensions rise, limiting investment and consumption and hurting growth. Another risk to Pakistan's outlook is "insufficient rain and the potential for drought," which could damage food security and further suppress growth. Growth in South Asia has slowed overall, with India's decelerationdue to delays in public investmentoffsetting recoveries in Pakistan and Sri Lanka. The ADB said that reforms in Pakistan have progressed under the International Monetary Fund (IMF) Extended Fund Facility, launched in October 2024, helping to stabilise the economy. However, the country still faces serious vulnerabilities and structural challenges. The ADB stressed that consistent policy implementation is crucial for resilience and, sustainable and inclusive growth. Provisional data from the first quarter points to a slow but sustained recovery, with performance in agriculture, industry, and services remaining lukewarm. Fiscal consolidation and weaker farm income, driven by an expected decline in major crop production, will likely constrain activity. Effective implementation of reforms should foster a more stable environment and gradually remove structural obstacles. Strong remittances, lower inflation, and monetary easing should support private consumption and growth. Sustaining fiscal consolidation and reducing risks from state-owned enterprises, particularly in the energy sector, are essential. The current account deficit is expected to remain contained this fiscal year. However, imports are likely to rise in the remaining months, as economic activity picks up, supported by monetary easing and improved macroeconomic stability. This could erase the current account surplus. Anticipated growth in remittances and expected financial inflows should lift official reserves to $13 billionequal to 2.9 months of import coverby June 2025, predicted the ADB in line with recent statements by Finance Minister Muhammad Aurangzeb.
Express Tribune
09-04-2025
- Business
- Express Tribune
Pakistan's GDP to grow by 2.5% in 2025, says ADB
Listen to article Pakistan's economy is showing positive signs of stability and recovery, with an expected 2.5% growth in real GDP for the fiscal year 2025 (ending June 30, 2026). This growth reflects the impact of stringent macroeconomic policies and progress in key economic reforms. According to the Asian Development Outlook (ADO) April 2025, the Asian Development Bank's (ADB) flagship economic publication, Pakistan's growth rate for FY2025 is projected to remain the same as the previous year (FY2024), which also saw a growth of 2.5%. ADB says Pakistan's growth is projected to tick up to 3.0% in FY2026. The growth outlook is being helped by a more stable macroeconomic position helped by the International Monetary Fund (IMF) Extended Fund Facility (EFF) arrangement that began in October 2024. Adherence to the economic adjustment program is critical for building resilience and enabling sustainable and inclusive growth. 'Pakistan's economy has benefitted from improved macroeconomic stability through robust reform implementation in areas such as tax policy and energy sector viability,' said ADB Country Director for Pakistan Emma Fan. 'Growth is projected to persist in 2025 and to increase in 2026. Sustained implementation of policy reforms is vital to buttress this growth trajectory and fortify fiscal and external buffers,' Fan added. In FY2025, growth is expected to be driven by a rebound in private sector investment linked to progress on reform measures, perceptions of greater economic stability, and a stable foreign exchange market. The successful implementation of the reform program is anticipated to continue creating a more stable macroeconomic environment and gradually remove structural barriers to growth. Economic activity in both the industrial and service sectors will benefit from recent monetary easing and macroeconomic stability. Additionally, strong remittance inflows, lower inflation, and monetary easing are likely to support aggregate demand. Average inflation is projected to decline significantly to 6.0% in FY2025 and further to 5.8% in FY2026. That's being driven by continued moderation in food inflation, stable global oil and commodity prices, moderate domestic demand conditions, and a favorable base effect. Female labor force participation remains low in Pakistan compared to regional and peer countries and enabling more women to work outside the home could boost productivity and output while advancing female empowerment. Continued investment in girls' education and vocational training programs that equip women with the skills needed for the job market, while improving public transport and ensuring safe travel options, can reduce barriers for women entering the labor market. The ADB clarified that the growth forecasts were finalized prior to the 2 April announcement of new tariffs by the US administration, so the baseline projections only reflect tariffs that were in place previously.
Yahoo
09-04-2025
- Business
- Yahoo
US tariffs, China slowdown cloud developing Asia's growth outlook, says ADB
MANILA (Reuters) - The full implementation of U.S. tariffs could cut developing Asia's growth by about a third of a percentage point this year and nearly a full percentage point in 2026, the Asian Development Bank said on Wednesday. In its Asian Development Outlook report, the ADB projected that growth in developing Asia will ease slightly to 4.9% in 2025 — the slowest pace since 2022 — and slow further to 4.7% in 2026, from 5.0% in 2024. The forecasts were finalised before the U.S. unveiled sweeping new import tariffs last week, the ADB said at a press conference for the report's release. "The elephant in the room is clearly whether the U.S. tariffs will be fully implemented, which would lead to lower growth in our baseline forecast," ADB chief economist Albert Park said. Developing Asia, as defined by the ADB, is made up of 46 Asia-Pacific countries stretching from Georgia to Samoa - and excludes countries such as Japan, Australia and New Zealand. Park said the eventual effects of the U.S. tariffs remain uncertain, as their scope and timing could change due to negotiations, delays, or exemptions being granted. "On the flip side, stronger retaliation and further escalation could result in bigger impacts," he said. "Additionally, the size and speed of policy changes under the new U.S. administration could reduce investment globally and in the region, while rising trade tensions and fragmentation would boost trade costs and disrupt global supply chains." The weaker baseline projections already reflect an expected slowdown in China, with growth forecast at 4.7% this year, down from 5.0% in 2024, and slowing further to 4.3% in 2026. Southeast Asia, which benefited from trade diversion during the 2018 U.S.-China trade war, is expected to lose some steam with growth in the subregion seen at 4.7% this year and next, down slightly from 4.8% in 2024. A bright spot is South Asia, the ADB said, where strong domestic demand is projected to drive growth of 6.0% in 2025 and 6.2% in 2026, up from last year's 5.8%. Sustained global demand for semiconductors should help underpin growth in developing Asia. Regional inflation is forecast to ease to 2.3% this year and 2.2% next year, from 2.6% in 2024, due to falling prices of global oil and other commodities. This should allow central banks to continue monetary easing, the ADB said, although at a slower pace given expectations the U.S. Federal Reserve would keep rates elevated for longer. GDP GROWTH 2023 2025 2025 2026 2024 DEC APRI APRI L L Caucasus and 5.3 Central Asia 5.4 5.7 5.4 5.0 East Asia 4.8 4.2 4.7 4.4 4.0 China 5.4 4.5 4.7 4.3 5.0 South Asia 7.8 6.3 6.0 6.2 5.8 India 9.2 7.0 6.7 6.8 6.4 Southeast 4.1 4.7 4.7 4.7 Asia 4.8 Indonesia 5.0 5.0 5.0 5.1 5.0 Malaysia 3.6 4.6 4.9 4.8 5.1 Myanmar 0.8 n/a 1.1 1.6 -0.7 Philippines 6.2 6.0 6.1 5.5 5.6 Singapore 1.8 2.6 2.6 2.4 4.4 Thailand 2.0 2.7 2.8 2.9 2.5 Vietnam 6.6 6.6 6.5 5.1 7.1 The Pacific 4.7 4.1 3.9 3.6 4.2 Developing 5.5 4.8 4.9 4.7 Asia 5.0 INFLATION Caucasus and 10.2 6.2 6.9 5.9 Central Asia 6.8 East Asia 0.6 1.1 0.6 0.9 0.5 China 0.2 0.9 0.4 0.7 0.2 South Asia 7.9 5.4 4.9 4.5 6.6 India 5.4 4.3 4.3 4.0 4.7 Southeast 4.2 3.1 3.0 2.8 Asia 3.0 Indonesia 3.7 2.8 2.0 2.0 2.3 Malaysia 2.5 2.6 2.5 2.5 1.8 Myanmar 27.5 n/a 29.3 20.0 27.8 Philippines 6.0 3.2 3.0 3.0 3.2 Singapore 4.8 2.2 2.0 1.7 2.4 Thailand 1.2 1.2 1.0 1.1 0.4 Vietnam 3.3 4.0 4.0 4.2 3.6 The Pacific 3.1 4.1 3.4 3.7 1.9 Developing 3.3 2.6 2.3 2.2 Asia 2.6
