China will remain the world’s No. 1 growth driver, says the Asian Development Bank

China will remain the largest growth engine for the world economy in spite of its slowdown, the Asian Development Bank said.

“China is obviously going to still be important for some time to come. They still account for nearly half of GDP in Asia Pacific,” ADB’s chief economist Albert Park said in a press conference for the bank’s Asian Development Outlook report. 

“Although growth is moderating, and we are expecting it to continue moderating in the coming years… it’s likely to contribute the most growth of any economy in the world to global growth,” said Park.

ADB forecasts China to post annual GDP growth of 4.8% in 2024, lower than the government’s target of “around 5%.” China’s economy expanded 5.2% in 2023, matching the official target of around 5%.

Even with slower growth, ADB data estimated China will account for 46% of growth in developing Asia in 2024-2025.

China currently accounts for 18% and 48% of global and Asian GDP, respectively, based on purchasing power parities exchange rates, a metric used by the ADB, World Bank and International Monetary Fund.

India’s stellar economic trajectory has led many to tout the country’s role as a technology and manufacturing powerhouse and an attractive alternative to China. The South Asian nation’s economy recently expanded at its fastest pace in six quarters, surpassing expectations with 8.4% growth in the October to December quarter of the current financial year 2023-24.

“India’s importance to growth in the region is increasing,” Park told CNBC via email. ADB expects the country’s growth to be the highest in the region, at 7% in 2024 and 7.2% in 2025. 

While India’s economy is undoubtedly a “bright spot,” it is still smaller than China’s, said Park. On the PPP exchange rate metric, the economist noted China’s economy is still about two and a half times that of India. 

“So on that benchmark, it will take a long time, I think, for India to really drive global growth,” he added.

Additionally, growth in advanced economies is expected to slow this year, with ADB forecasting U.S. GDP growth to dip to 1.9% from last year’s 2.5%, and Japan’s to grow 0.6% compared to 1.9% in 2023.

The bank in its report also said it expects developing Asia’s growth this year to be slightly stronger than its December projections, as healthy domestic demand offsets the slowdown in China.  

In spite of rising energy prices, inflation is also expected to moderate in Asia-Pacific from 3.3% in 2023 to 3.2% this year.