In its annual Asian Development Outlook report, the Manila-based lender said the region’s gross domestic product was forecast to grow 4.8% this year and in 2024, up from 4.2% in 2022.

“China’s reopening — as it pivots away from its zero-Covid strategy — is the main factor brightening the region’s growth prospects,” the bank said.

“Population mobility in China has normalized following the end of the zero-Covid strategy, and activity in services is rebounding the fastest,” the report said.

“The reopening of China will boost regional growth through demand for goods and services, as well as supply chain linkages.”

The outlook for regional tourism, which has returned to almost pre-pandemic levels in some economies, has also improved on China’s reopening.

China’s economy was projected to grow 5% in 2023 and 4.5% in 2024, up from 3% in 2022, the report said.

Regional inflation will decelerate to 4.2% in 2023 and 3.3% in 2024 after reaching 4.4% last year, the report said.

“Fading supply chain pressures, tighter monetary conditions, and declining though still elevated commodity prices are expected to shape developing Asia’s inflation outlook,” it added.

Amid the brighter prospects, the bank warned many challenges remain, including risks from Russia’s invasion of Ukraine and higher debt and interest rates.