BEIJING, CHINA – APRIL 29: Beijing South Railway Station is seen in Beijing on Saturday April 29, 2023.
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The International Monetary Fund raised its forecast for Asia-Pacific, saying the region’s growth will be mainly driven by the recovery in China and “resilient” growth in India. This comes as the rest of the world braces for slower growth due to monetary policy tightening and Russia’s invasion of Ukraine.
The organization expects Asia-Pacific’s gross domestic product to grow 4.6% this year, 0.3 percentage points higher than its October forecast, according to its May regional economic outlook. published on Tuesday.
The region’s two largest emerging market economies are expected to contribute about half of global growth this year.
International Monetary Fund
The IMF’s improved outlook would mean the region would contribute about 70% of global growth, he said. The region saw an expansion of 3.8% in 2022.
“Asia and the Pacific will be the most dynamic of the major regions of the world in 2023, mainly driven by the dynamic prospects of China and India,” the IMF said in its report.
“The region’s two largest emerging market economies are expected to contribute about half of global growth this year, with the rest of Asia and the Pacific contributing an additional fifth,” he said.
By country, the organization raised its growth outlook for China, Malaysia, the Philippines and Laos to 5.2%, 4.5%, 6% and 4% respectively.
Although it has lowered its annual growth forecast for India, the IMF still expects the economy – which is on the verge of becoming the most populous country in the world – to grow by 5.9% in 2023.
Slower advanced economies
Despite the general optimism for the region – mainly due to a more optimistic outlook for emerging markets – the IMF has revised down its forecasts for Japan, Australia, New Zealand, Singapore and South Korea.
“Stronger external demand from China will provide some breathing room for advanced economies in the region, but should be more than offset by the ripple effect of other domestic and external factors,” he said, adding that growth in Asia outside of China and India “is expected”. bottom out in 2023.”
It lowered Japan’s growth estimate for 2023 to 1.3% to reflect “weaker external demand and investment and the postponement of disappointing growth to the last quarter of 2022”.
Weaker domestic demand in Australia and New Zealand due to central bank tightening is also expected to “damper growth prospects” this year to 1.6% and 1.1%, respectively, he said. added.
“Inflationary pressures in advanced economies in Asia are expected to be more persistent than projected in the October 2022 World Economic Outlook, as wage growth has recently become more apparent in Australia, Japan and New Zealand. “, said the IMF in its report.
Overflow from China
High consumption in China is likely to spill over to the rest of Asia-Pacific, the IMF said, adding that China’s reopening after lifting most of its strict Covid restrictions “will lead to a recovery in the economy.” private consumption that will drive China’s growth rebound.” “
This effect should exceed that of other drivers of growth, such as investment.
The short-term economic impact of China’s recovery “will likely vary from country to country, with those most reliant on tourism likely reaping the most benefits,” he said, noting that an increase in Chinese imports will be more strongly reflected in services.
The IMF said Asia-Pacific economies could also feel the ripple effects of ongoing geopolitical tensions in China. The organization had previously estimated that global tensions could disrupt overseas investment and lead to a long-term loss of 2% of global gross domestic product.
“The risks of further fragmentation in global trade are becoming more evident, given ongoing trade disputes between the United States and China (including new restrictions on trade in high-tech products) and heightened geopolitical tensions. related to Russia’s war in Ukraine,” he said.