The Asian Development Bank (ADB) has lowered its economic growth forecasts for developing Asia, citing rising inflation and the ongoing global economic slowdown. The ADB’s updated projections, released today, indicate a regional growth rate of 7.6% for 2008 and 7.5% for 2009. These figures are a downward revision from the ADB’s previous forecasts of 8.0% and 7.8%, respectively.

According to the ADB, the primary factors contributing to this revised outlook are:

• Rising Inflation: Many economies in developing Asia are grappling with accelerating inflation, driven by soaring food and fuel prices. This inflationary pressure is eroding purchasing power and dampening consumer spending.
• Global Economic Slowdown: The economic slowdown in developed countries, particularly the United States, is impacting Asian exports and overall demand. Weaker external demand is weighing on the region’s growth prospects.

Despite these challenges, the ADB remains optimistic about the long-term growth potential of developing Asia. The region’s strong fundamentals, including high savings rates and growing domestic demand, should help to mitigate the impact of external shocks.

Key highlights from the ADB report include:

• China’s growth forecast has been revised down to 9.7% in 2008 and 9.5% in 2009.
• India’s growth forecast has been lowered to 7.4% in 2008 and 7.0% in 2009.
• The ADB expects inflation to remain elevated in the coming months but anticipates a gradual easing in 2009.

The ADB advises governments in the region to implement appropriate policy measures to address inflation and support sustainable growth. These measures include tightening monetary policy, improving supply-side efficiency, and promoting fiscal prudence.