Asian Development Bank raises growth forecast for region, but warns of risks from trade sanctions

Developing economies in Asia are forecast to grow at a 5.0% annual pace this year, helped by a strong U.S. economy and surging demand for computer chips that power artificial intelligence, the Asian Development Bank said in a report Wednesday.

The forecast was revised upward slightly from the ADB’s April estimate of 4.9% growth.

However, the regional lender warned of the potential threat of more protectionist measures, such as higher tariffs on exports from China, depending on the outcome of the U.S. presidential election.

The report highlighted several positive trends, including a rebound in exports from Asia of computer chips and other advanced electronics this year due to rapid adoption of artificial intelligence. It also noted that energy and food prices are moderating, though inflation remains painfully high in countries such as Pakistan, Laos and Myanmar.

The upturn in global demand for semiconductors and related electronics materials and components has helped drive stronger growth in Taiwan, Hong Kong, Singapore and South Korea, and to a lesser extent, the Philippines and Thailand, and that trend is expected to continue.

The report cited data from World Semiconductor Trade Statistics projecting that spending on memory chips, vital for AI applications, will expand 77% this year.

Other types of exports, especially autos from China and South Korea, also are growing quickly, it said.

The U.S. presidential election is a major source of uncertainty.

“The election could result in higher blanket tariffs by the U.S. on all global imports, and a broad-based and steep increase in tariffs on all U.S. imports from the PRC (China),” the report said. “This would significantly escalate U.S.-PRC trade tensions, with potential