MANILA: Surging global investments in artificial intelligence and easing inflation give developing Asia a launch pad for sustained economic growth in 2024 and 2025, the Asian Development Bank said Wednesday. With goods exports jumping 8.0 percent in July, the Manila-based lender slightly raised its 2024 economic growth forecast for the region to 5.0 percent this year, up from 4.9 percent projected in April.

It kept its 2025 forecast unchanged at 4.9 percent. Developing Asia refers to the multilateral lender’s 46 emerging member economies, stretching from Kazakhstan in Central Asia to the Cook Islands in the Pacific.

“High-income technology exporters benefited as global sales of semiconductors rose amid strong demand for artificial intelligence products” from China, Taiwan and South Korea, ADB chief economist Albert Park said. The bank lowered its inflation forecast for the region this year to 2.8 percent, from 3.2 percent in April, as food prices bottom out more slowly than expected in China.

Developing Asia is on track to grow 5 percent this year, supported by strong consumption and high demand for tech exports, the ADB forecast and said China was expected to roll out more economic support measures. In an update to its Asian Development Outlook report, the ADB left most growth projections for economies in the region unchanged from its July report, maintaining its growth outlook for developing Asia at 5.0 percent this year and 4.9 percent next year.

The inflation forecast for 2025 is also revised down to 2.9 percent, from 3.0 percent earlier this year, “creating conditions for eventual monetary policy easing” to support economic activity. Retreating inflation, increased global demand for electronics as well as cars and ships from China and South Korea, and an improved growth outlook for major advanced economies are helping Asia’s prospects, the bank said in a report. Non-electronic exports are also growing, though more moderately, according to the Asian Development Outlook report, which the lender publishes biannually.

The ADB however said Beijing would fall short of its target of five percent growth for 2024, forecasting expansion of 4.8 percent. After 5.2 percent growth last year, the Chinese economy is expected to expand by 4.5 percent in 2025 according to the new report.

“Protracted property sector weakness weighed on consumer sentiment and household spending, although higher investment supported by monetary and fiscal stimulus partially offset it,” it added.

Beijing on Tuesday announced what analysts described as its most significant stimulus package in years to boost the struggling economy.

ADB’s chief economist told a news conference the package was “good to see”, but “whether that will work I think remains to be seen”. The lender also warned of a possible rise in protectionism, depending on the outcome of the US presidential election in November.

There may be “higher blanket tariffs by the US on all global imports” and reciprocal hikes on duties imposed by Beijing, with potential spillovers across developing Asia. South Asia will be the fastest-growing part of the region this year, the bank said, even after India’s expansion slowed in the first half.

Helped by government spending and private consumption, India’s economy is forecast to grow by 7.0 percent this year and 7.2 percent in 2025. The figures follow growth of 8.2 percent last year.

Park also said the ADB was not so concerned about deflation in China as it sees prices recovering. Last week, the US Federal Reserve kicked off its own easing cycle with a hefty half-percentage-point rate cut. “With the Fed’s 50 basis point rate cut, central banks have more space to ease, and we expect more of them to do so,” Park said.

The ADB kept its 2024 growth forecast for China at 4.8 percent, below the government’s official target of about 5 percent. Growth for 2025 is still forecast at 4.5 percent. “The PRC (People’s Republic of China) growth forecast is retained despite the prolonged downturn in the property sector, on the assumption that further fiscal and monetary easing will help sustain the economy,” Park said. — Agencies