This update revises slightly down the region’s growth forecast for this year to 4.7% on slower expansions in South Asia and Southeast Asia. The growth forecast for 2024 is unchanged at 4.8%.

Inflation in developing Asia is forecast to decline from 4.4% last year to 3.6% in 2023 and 3.5% in 2024. Much of this year’s decline will be driven by the People's Republic of China (PRC), where the inflation forecast is revised down to 0.7%.

Downside risks to the outlook have strengthened. A close watch is needed on the weaknesses in the PRC’s property sector. Across the region, authorities will need to take policy steps to ensure that supply disruptions and the wide-ranging effects of El Niño do not raise food security challenges. Financial stability risks require continued vigilance in vulnerable economies as the era of easy money ends. On a positive note, a faster-than-expected decline in inflation in the United States could boost global prospects.