(Yicai) April 12 -- Semiconductor and service exports, including tourism, as well as domestic demand in many economies, will be the main factors driving Asia's economic growth this year, according to a report by the Asian Development Bank.

"Prospects for Asia and the Pacific remain strong as the post-pandemic recovery continues, with growth projected at 4.9 percent in both 2024 and 2025," the ADB's President Masatsugu Asakawa said in the Asian Development Outlook report released yesterday. "Healthy domestic demand in many economies -- including in South and Southeast Asia -- will drive the region's expansion."

"The end of interest rate hiking cycles in most economies, as well as the continued recovery in goods exports from an upturn in the semiconductor cycle, will support growth," said Albert F. Park, chief economist at the ADB.

Semiconductor exports from Asia are rising, driven by increasing global demand for microprocessors and memory chips. Following a sharp contraction at the end of 2022, exports from Asia's major semiconductor manufacturing economies rebounded last year, up around 15 percent in the fourth quarter from the first quarter of last year.

The artificial intelligence boom is fueling demand for advanced microprocessors and memory chips in Asia. South Korea is seeing rapidly growing AI-related demand for memory chips, of which it is a leading global manufacturer and which accounted for around 50 percent of its total semiconductor exports last year.

China plans to refine and scale up production of advanced microchips, including microprocessors and memory chips. Malaysia, the Philippines, Thailand, and Vietnam, though with a small share in the memory chips and microprocessors manufacturing, may still benefit from the AI-driven demand for specific microchips, given their specialization in downstream services, such as assembly, testing, and packaging.

China's economy is expected to grow 4.8 percent this year, with steady growth in the high-tech and other manufacturing sectors, according to the report. Improving labor market and household income will drive consumer spending and the overall economic growth in the country this year, said Safdar Parvez, chief representative of ADB China.

Regarding concerns raised by US Treasury Secretary Janet Yellen about excess capacity, Akiko Terada-Hagiwara, director of economic research and strategic planning at ADB, highlighted the positive role of excess capacity in transitioning to clean energy.

Meanwhile, ADB's Senior Economist Yothin Jinjarak emphasized the importance of industries such as solar panels, electric vehicles, and lithium batteries in the transition to a low-carbon economy, underscoring the need for open dialogue and confidence in the global trade system.

India is expected to grow 7 percent this year, driven by strong investment, recovering consumption, and gains in electronics and services exports. Macroeconomic stabilization in Pakistan and Sri Lanka will bring positive growth this year and is expected to accelerate in 2025. In Southeast Asia, growth will be supported by resilient domestic demand and the ongoing rebound in post-pandemic tourism.

Editor: Futura Costaglione