2024-09-26-ADB-2024年亚洲发展展望（九月版）_212页_21mb

Summary of Asian Development Outlook September 2024

Core Content

The Asian Development Outlook (ADO) September 2024 provides an updated analysis of economic growth and inflation trends in Developing Asia, along with insights into the global spillovers of US monetary policy. The report highlights both positive developments and emerging risks that could affect the region's economic stability and growth trajectory.

Economic Growth and Inflation Outlook

• Growth in Developing Asia remained robust during the first half of 2024, driven by strong domestic demand and a recovery in exports.
• The 2024 growth forecast for the region was revised upward to 5.0% from 4.9% in April, reflecting stronger-than-expected expansions in East Asia, Caucasus and Central Asia, and the Pacific.
• 2025 growth forecast remains at 4.9%.
• Inflation in the region is expected to decline to 2.8% in 2024 and 2.9% in 2025, down from the previous forecast of 3.2% in April 2024.
• The PRC was a key driver of growth, but its property market weakness and slower-than-expected food price declines contributed to the downward revision in inflation.

Regional Breakdown

• East Asia growth is revised to 4.6% from 4.5% due to higher-than-expected external demand for semiconductors from the Republic of Korea and Taipei, China.
• Caucasus and Central Asia growth is at 4.7%, supported by stronger domestic demand and remittances in some economies.
• South Asia growth remains at 6.3% for 2024, driven by solid performance in India, while Southeast Asia faces a slight downward revision due to slower-than-expected export recovery.
• The Pacific growth is revised upward to 3.4%, mainly due to increased tourist arrivals.

Key Risks

• Protectionism and trade fragmentation could increase depending on the outcome of the US presidential election, potentially leading to higher tariffs and worsening US-PRC trade tensions.
• Geopolitical tensions, especially in the Middle East and Ukraine, could disrupt global supply chains and raise commodity prices.
• Fragile PRC property market could further weaken growth prospects, with indirect effects on consumer and investor sentiment and local government revenues.
• Climate-related risks, such as La Niña, could impact food and energy security, leading to volatile commodity prices. La Niña is expected to develop in Q3 2024 and persist into Q1 2025, potentially increasing rainfall and affecting agriculture and water resources.

Main Views

• Robust growth continues in Developing Asia, supported by strong exports and domestic demand, but risks remain.
• Inflation is easing due to tight monetary policies and falling global food prices, though core inflation has returned to pre-pandemic levels.
• Monetary policy easing is anticipated in the region as inflation remains below or near target levels in most economies.
• Central banks in the Caucasus and Central Asia are lowering interest rates, while others maintain rates due to depreciation concerns.
• Fiscal deficits are narrowing, but vulnerabilities persist, particularly in economies with high public debt and interest payments.

Key Information

• US monetary policy has significant spillover effects on global financial markets, especially through data-dependent adjustments.

• The report introduces a novel analysis of how US data releases influence expectations about Fed policy, which in turn affect exchange rates, bond yields, and stock markets.

• Inflation-driven Fed policy can lead to higher bond yields, currency depreciation, and stock market declines in other economies.

• Employment-driven Fed policy primarily impacts debt and currency markets, with limited effects on equity markets.

• Scenario analysis suggests that an unexpected rise in US inflation to 2.9% by end-2024 could lead to:

  • 70 basis points increase in foreign short-term bond yields
  • 4% depreciation of Asian currencies against the US dollar
  • 5.5% decline in stock markets
  • 3.3 percentage point increase in government default probabilities

• A deep cooling of the US economy would result in:

  • 95 basis points decrease in short-term bond yields
  • 30 basis points decrease in long-term bond yields
  • 4.5% appreciation of Asian currencies against the US dollar
  • 5% rise in stock markets
  • 3 percentage point decrease in government default probabilities

Policy Implications

• Policymakers in the region are advised to maintain macroeconomic stability and integrate climate-related risks into policy frameworks.
• Free trade and regional integration should be prioritized to counter potential protectionist measures.
• Fiscal discipline and sound monetary policy are critical to managing debt levels and enhancing economic resilience.
• Coordination with international partners is essential to mitigate external shocks and support sustainable growth.

Conclusion

The ADO September 2024 underscores the resilience of the region's economies despite ongoing challenges and risks. While growth remains solid, the potential for external shocks necessitates vigilance and adaptive policymaking. The data-driven nature of US monetary policy highlights the importance of monitoring global economic signals and responding proactively to maintain stability in the region.