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China will remain the biggest growth engine for the world economy despite its slowdown, the Asian Development Bank said.
“China will obviously continue to be important for some time to come. It still accounts for almost half of Asia Pacific’s GDP,” ADB chief economist Albert Park said at a news conference for the ADB’s Asian Development Outlook report. bank.
“Even though growth is moderating, and we expect it to continue to moderate over the next few years… it is likely to contribute more to global growth than any other economy in the world,” Park said.
The ADB expects China to post annual GDP growth of 4.8% in 2024, below the government’s target of “around 5%”. China’s economy grew 5.2% in 2023, reaching the official target of about 5%.
Even with slower growth, ADB data estimates that China will account for 46% of growth in developing Asia in 2024-2025.
China currently accounts for 18% and 48% of global and Asian GDP, respectively, based on purchasing power parity exchange rates, a metric used by the ADB, World Bank and International Monetary Fund.
And India?
India’s stellar economic trajectory has led many to tout the country’s role as a technology and manufacturing powerhouse and as an attractive alternative to China. The South Asian nation’s economy recently expanded at the fastest pace in six quarters, beating expectations with growth of 8.4% in the October to December quarter of the current 2023-24 financial year.
“India’s importance to growth in the region is increasing,” Park told CNBC via email. The ADB expects the country’s growth to be the highest in the region, at 7% in 2024 and 7.2% in 2025.
While India’s economy is undoubtedly a “bright spot,” it is still smaller than China’s, Park said. Regarding the PPP exchange rate, the economist noted that China’s economy is still about two and a half times that of India.
“So, looking at this benchmark, I believe it will take a long time for India to truly lead global growth,” he added.
Additionally, growth in advanced economies is expected to slow this year, with the ADB forecasting that US GDP growth will fall to 1.9% from 2.5% last year, and Japan’s will grow by 0.6% compared to 1.9% in 2023.
The bank also said in its report that it expects developing Asia’s growth this year to be slightly stronger than December’s projections, as healthy domestic demand offsets China’s slowdown.
Despite rising energy prices, inflation is also expected to decline in the Asia-Pacific region, from 3.3% in 2023 to 3.2% this year.