ADB: AI Demand Fuels Asia’s Growth, Indonesia's Economy Steady at 5 Pct
Jakarta. The Asian Development Bank (ADB) has revised its growth forecast for developing economies in Asia to 5 percent for 2024, up slightly from its April estimate of 4.9 percent. This upward revision is driven by strong US economic performance and rising demand for computer chips, especially those used in artificial intelligence.
However, the ADB warned of potential risks from trade sanctions, particularly higher tariffs on Chinese exports, depending on the outcome of the US presidential election.
The report highlighted a rebound in Asian exports, particularly in semiconductors and advanced electronics, fueled by AI adoption. Growth has been especially strong in Taiwan, Hong Kong, Singapore, and South Korea, with semiconductors playing a critical role. Spending on memory chips, crucial for AI, is expected to increase by 77 percent this year, according to World Semiconductor Trade Statistics.
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The ADB maintained its GDP projections for Indonesia at 5 percent for both 2024 and 2025, with the inflation rate expected to remain at 2.8 percent.
Despite these positive trends, the ADB cautioned about uncertainties related to US trade policies. The report emphasized the potential impact of heightened US-China trade tensions, particularly if blanket tariffs on Chinese imports are imposed, which could have significant repercussions for developing Asia.
ADB Keeps Indonesia's 2024 Growth Forecast at 5 Percent
China's ailing property market remains a major concern. The ADB kept its growth forecast for China at 4.8 percent for 2024 and 4.5 percent for 2025. While recent steps by Beijing to reduce borrowing costs and encourage home purchases are seen as positive, their effectiveness is still uncertain.
The report also noted easing energy and food inflation, with energy prices returning to pre-pandemic levels. Rice prices, which peaked earlier this year, are expected to continue declining as record harvests are projected for the 2024-2025 season, bolstered by the La Niña climate phenomenon.
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