JAKARTA, RAKYAT NEWS – The Asian Development Bank (ADB) has projected stable economic growth for Asia and the Pacific in 2024 and 2025, despite potential long-term effects of policy changes under former U.S. President Donald Trump.

ADB’s recent report, the Asian Development Outlook (ADO) for December 2024, suggests that significant shifts in U.S. trade, fiscal, and immigration policies could slow growth and increase inflation in developing countries across Asia and the Pacific.

According to Albert Park, ADB’s Chief Economist, these policy changes are expected to impact China’s economy moderately, with potential ripple effects across the broader region. While the U.S. economy will likely feel the effects of these shifts sooner, it may take longer for Asia-Pacific nations to experience tangible consequences—likely by 2026.

However, rapid implementation of such policies could bring these impacts sooner, particularly if American businesses adjust their import strategies to avoid potential tariffs.

Economic growth for developing countries in Asia-Pacific is projected at 4.9% in 2024, slightly lower than ADB’s previous forecast of 5%. For 2025, growth expectations have been revised down to 4.8% from 4.9%, largely due to weaker domestic demand in South Asia.

The region’s inflation forecast has been slightly reduced, with 2024 inflation expected to be 2.7%, down from 2.8%, and a further decline to 2.6% in 2025, due in part to expectations of moderating oil prices.

Domestic demand and robust exports continue to drive economic expansion across the region. However, ADB forecasts that any major changes in U.S. policies, especially those involving trade and immigration, will likely unfold gradually.

In a worst-case scenario, aggressive policy shifts from the U.S. could shave off 0.5 percentage points of global GDP growth over the next four years. These changes could also reduce international trade and investment, leading to more expensive domestic production.

Should the U.S. impose widespread tariffs and restrict immigration, the resulting pressures on inflation could have global ramifications. A shrinking labor supply in the U.S. may compound the issue, further elevating inflationary pressures, particularly under a potentially more expansive fiscal policy proposed by a new Trump administration. Nevertheless, these negative effects are expected to have a limited impact on growth in developing Asia-Pacific countries, especially without additional policy support from the U.S.

In fact, China’s GDP growth is projected to slow by an average of 0.3 percentage points annually through 2028, even without any additional U.S. policy changes. The negative spillover effects in the region are expected to be mitigated by trade diversions and production shifts away from China to other countries, reducing the overall impact on the economy of Asia and the Pacific.

Looking closer at specific economies, China’s growth forecast remains unchanged at 4.8% in 2024, followed by 4.5% in 2025. India’s outlook has been revised downward, with expected growth of 6.5% in 2024, compared to an earlier forecast of 7%. This adjustment reflects weaker private investment and lower-than-expected demand in the housing sector. In Southeast Asia, however, growth projections for 2024 have been revised upward to 4.7%, driven by stronger manufacturing exports and increased government capital spending.

Growth forecasts for the Caucasus and Central Asia have also been adjusted upward, with an anticipated 4.9% growth this year and 5.3% in 2025. In contrast, the Pacific Islands’ growth projections remain stable at 3.4% for 2024 and 4.1% for 2025. Despite these generally positive forecasts, risks to economic growth and inflation remain, including the potential escalation of geopolitical tensions and the continuing vulnerability of China’s property markets.

Beyond the uncertainties surrounding U.S. policy changes, ADB remains committed to supporting sustainable, inclusive, and resilient growth in Asia and the Pacific. Founded in 1966, ADB works towards eradicating extreme poverty and ensuring long-term prosperity across the region. With 69 members, 49 of which are located in Asia and the Pacific, ADB continues to be a key player in driving development across the region. (Uki Ruknuddin)