IMF projects rise in APAC growth to 4.6% in 2023; China biggest driver

Global inflation is easing but remains stubbornly high, and banking strains in the United States and Europe have injected greater uncertainty into an already complex economic landscape, it said.

Despite the somber backdrop of a challenging year for the world economy, Asia and the Pacific (APAC) remains a dynamic region, it noted.

Growth in the APAC region is projected to increase this year to 4.6 per cent, up from 3.8 per cent in 2022. This reflects an increase of 0.3 percentage points compared with projections IMF had made in the October 2022 World Economic Outlook.

The biggest driver of Asia’s upward growth revision this year is China, while other emerging economies in the region are on track to enjoy solid growth, though in some cases at slightly lower rates than seen last year.

In Asia’s advanced economies, growth will slow this year to 1.6 per cent. This is about 0.4 percentage points lower than IMF’s October projection.

APAC economies are expected to contribute about 70 per cent of global growth in 2023, which is a significantly larger share than IMF has seen during the past few years.

The Chinese economy is expected to expand by 5.2 per cent this year. Data from the first quarter, which includes a very sharp rebound in exports, have confirmed IMF’s forecast of a dynamic start to 2023.

IMF sees this boosting growth in the rest of Asia as well—typically, a one percentage point increase in Chinese growth leads to an increase, on average, of about 0.3 percentage points in the rest of Asia.

One factor that is weighing on the short-term outlook for the region is the weakening of external demand, with the United States and Europe expected to have very weak import growth in 2023 and 2024. In recent data, this is putting pressure on Asia’s exports of manufactured goods. IMF noted.

Fibre2Fashion News Desk (DS)