On December 11, the Asian Development Bank released a supplementary report to the Asian Development Outlook 2024, saying that the ADB lowered its economic growth forecast for developing economies in the Asia-Pacific region to 4.9% in 2024 and 4.8% in 2025. From the specific data, the downward revision of economic growth forecasts in East Asia and South Asia offset the growth in the Caucasus, Central Asia and Southeast Asia, causing the region's economic growth forecast to fall by 0.1 percentage point. In 2025, South Asia's growth is expected to slow due to weak domestic demand. At the same time, affected by the weakening of global commodity prices, the report predicts that the inflation rate of developing economies in the region will be 2.7% this year and 2.6% in 2025.

Despite the downward revision of economic growth expectations, economic growth in developing economies in the Asia-Pacific region remains stable, which shows that the region's economy has a certain degree of resilience and can maintain a certain level of growth despite changes in the external environment.

In addition, policy risks from the new U.S. administration and geopolitical tensions may exacerbate volatility in commodity prices and global financial markets, posing certain challenges to the economies of the Asia-Pacific region.

I. Main factors for downward revision of economic growth expectations

1. External factors

• The uncertainty of the US political situation and the trade, fiscal and immigration policies that the new president may implement after taking office have the potential to suppress economic growth in the Asia-Pacific region and exacerbate inflation.
• The global economic environment is turbulent, geopolitical tensions and supply chain issues are frequent.
• Weak commodity prices not only affect the inflation rate, but may also put pressure on economic growth in countries and regions that rely on commodity exports.

2. Internal factors：Weak domestic demand in South Asia will become an important reason for the slowdown in future economic growth.

2. Challenges Ahead

1.Market demand

The downward revision of economic growth expectations may lead to a slowdown in residents’ income growth in the Asia-Pacific region, which will suppress consumption capacity to a certain extent and may lead to a corresponding contraction in market demand.

2.Trade Policy

The uncertainty of US policies may trigger the rise of trade protectionism or adjustments to trade policies, and increase the trade barriers and policy risks faced by foreign trade companies, such as imposing additional tariffs and setting up non-tariff barriers, which will increase the export costs of companies and reduce the competitiveness of their products in the international market.

3.Exchange rate fluctuations

Changes in economic growth expectations may cause exchange rate fluctuations. When the market is concerned about the economic prospects of the Asia-Pacific region, it may lead to currency depreciation in the region, which has both positive and negative effects on foreign trade companies. On the one hand, currency depreciation may enhance the price competitiveness of export products to a certain extent; on the other hand, it will also increase the cost of imported raw materials and parts, compressing corporate profit margins.

4.Supply Chain

The slowdown in economic growth in the Asia-Pacific region may affect the stability of the industrial chain and supply chain. Some companies may reduce production or adjust their supply chain layout due to declining market demand, leading to problems such as interruption of raw material supply and shortage of parts, affecting the normal production and delivery of foreign trade companies.

5.Competitive Landscape

The downward revision of economic growth expectations will make market competition more intense. Relevant companies will not only face competition from companies in their own region, but may also face competitive pressure from companies in other regions. They need to continuously improve product quality, optimize product structure, and reduce costs in order to stand out from the competition.

Potential Opportunities

As the global economy is changing rapidly, countries in the Asia-Pacific region face many challenges, but also unlimited opportunities.

With the rapid development of global science and technology and the high attention paid to environmental protection, the rise of digital economy and green economy has become a new driving force for the development of related foreign trade fields. Enterprises in the Asia-Pacific region can seize this opportunity to increase research and development and production of green technologies and products, expand international markets, and drive the development of related foreign trade fields.