The economic growth of Asia and the Pacific is expected to remain steady in 2024 and 2025, but significant uncertainties loom due to potential policy shifts under the incoming administration of U.S. President-elect Donald Trump, according to the latest report by the Asian Development Bank.
The ADB’s Asian Development Outlook points to changes in U.S. trade, fiscal, and immigration policies as key risks to the region’s economic trajectory. These policy changes could dampen growth and fuel inflation in developing Asia and the Pacific. However, the full impact is expected to unfold gradually, likely from 2026, as U.S. policies are rolled out over time. A more rapid implementation, or a rush by U.S. companies to front-load imports to avoid potential tariffs, could bring these effects sooner.
The report revises the region’s growth forecast for 2024 slightly downward, projecting a 4.9 percent expansion, compared to the 5.0 percent forecast in September. The growth forecast for 2025 has also been lowered to 4.8 percent, down from 4.9 percent. This downgrade is primarily due to weaker domestic demand in South Asia, where economic activity has slowed. Inflation in the region is expected to remain subdued, with a revised outlook of 2.7 percent for 2024 (down from 2.8 percent) and 2.6 percent for 2025 (down from 2.9 percent), partly reflecting moderating oil prices.
ADB continues to forecast growth in the Philippines at 6.0 percent for this year and 6.2 percent for next year, the same projection as in September. Average inflation for this year is now projected at 3.3 percent this year from 3.6 percent forecast in September, while the forecast for 2025 was kept at 3.2 percent.
Despite these challenges, the ADB highlighted that strong domestic demand and export growth continue to support the region’s economic resilience. “However, U.S. policy changes could slow growth and increase inflationary pressures, particularly in China, with ripple effects across the region,” said ADB Chief Economist Albert Park.
As the global landscape shifts, the region must navigate these external challenges while continuing to capitalize on its domestic strengths.
