The International Monetary Fund (IMF) raised Asia’s economic forecast on Tuesday as China’s recovery underpinned growth, but warned of risks from persistent inflation and global market volatility driven by western banking sector woes.
The reopening of China’s economy will be pivotal for the region with the spillover to Asia seen focused on consumption and service-sector demand rather than investment, the IMF said.
“Asia and Pacific will be the most dynamic of the world’s major regions in 2023, predominantly driven by the buoyant outlook for China and India,” the IMF said in its regional economic outlook report.
“As in the rest of the world, domestic demand is expected to remain the largest growth driver across Asia in 2023.”
Asia’s economy is expected to expand 4.6% this year after a 3.8% increase in 2022, contributing around 70% of global growth, the IMF said, upgrading its forecast by 0.3 of a percentage point from October.
China and India will be key drivers with an expansion of 5.2% and 5.9%, respectively, though growth in the rest of Asia is also expected to bottom out this year, the report said.
But the IMF cut next year’s Asian growth forecast by 0.2 percentage of a point to 4.4%, and warned of risks to the outlook such as stickier-than-expected inflation, slowing global demand as well as the impact of US and European banking-sector stress.
Published in The Express Tribune, May 3rd, 2023.
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