China is still a key driver of the global economy, says ADB

The Asian Development Bank reports that it believes China will continue to be a key driver in the world economy despite experiencing a nationwide slowdown. According to ADB's most recent forecast, states that China continues to make a significant contribution both to regional and global economic growth, underscoring its enduring strength even during difficult times.

The recently published ADB Outlook forecasts that China's GDP will increase by 4.8% over the next twelve months, a figure slightly below the Chinese government's goal of "around 5%." China's economy grew by 5.2% in 2023 in line with official targets, reinforcing China's ability to keep growing.

Albert Park, Chief Economist, emphasized China's crucial role, especially within the Asia Pacific Region, where China accounts for almost half of GDP. Park said during a briefing that China's contribution to global economic growth was unmatched.

ADB predicts that China will account for 46% of growth in Asia over the next year and makeup 18% of global GDP, based on the purchasing power parity exchange rates.

India is also a rising star in both technology and manufacturing and offers an alternative to China, with its economy growing at an impressive 8.4% from October to December 2024, exceeding expectations and signaling the country's increasing importance for regional growth.

ADB predicts that India will lead the region this year with a growth rate of 7%, which is expected to grow to 7.2% next year. Park noted that India's dynamism was becoming increasingly important to the Asian economic landscape.

China and India's strategic positions are crucial now more than ever as the world economy navigates a period of change and uncertainty. China's position as a global leader in growth, despite its modest pace, combined with India's rapid rise, signals a shift of economic power in Asia.

The ADB's opinion not only reflects the current economic climate but also offers a glimpse into the future direction of Asia's--and indeed, the world's --economic landscape. While India's economy may be a "bright point," it's still smaller than China, Park said, with China's GDP about 2.5 times greater than India's.

He added, "So, on that benchmark, I think it will take India a long time to really drive the global growth."

ADB predicts that the growth of advanced economies will slow down this year. The U.S. GDP is forecast to drop to 1.9% from 2.5% last year, while Japan's growth is predicted to be 0.6%, compared with 1.9% in 2023.

In its report, the bank also stated that it expects Asia's development to grow this year at a slightly higher rate than its December forecasts as domestic demand will offset China's slowdown.