Asia-Pacific's GDP estimated to grow 3.8% in 2023: S&P Global

US policy rates are expected to increase and are forecast to start falling only in 2024. As a result, strain on Asia-Pacific markets and currencies will persist throughout 2023.

For most Asia-Pacific economies, China's recovery is not enough to counterbalance the impact of the slowdown in the US and Europe in 2023, particularly given the domestic services-led nature of China's growth, which restricts the spillover via imports, as per S&P Global’s Economic Outlook Asia-Pacific Q3 2023 report.

In the first quarter of 2023, weak exports generally impacted Asia-Pacific GDP growth. This external weakness led to negative GDP growth in trade-exposed economies like Singapore and Taiwan.

Robust domestic demand across the region lessened the overall impact on growth. Large economies like India and Japan even witnessed accelerating GDP growth due to domestic resilience.

For instance, in India, the March quarter outperformed expectations, leading Statistics India to revise its whole-year GDP growth estimate in fiscal 2023 (ending March 30) upwards from 7 per cent to 7.2 per cent, indicating a strong recovery from COVID-19.

In Japan, buoyant private consumption and investment pushed GDP growth above anticipations. Across the region, lingering reopening dividends helped boost private consumption growth beyond 4.5 per cent year-on-year in all but four of the 12 economies for which disaggregated national accounts data is available.

However, S&P Global expects the impact of higher interest rates to become more visible in the second half of 2023, especially in countries like Australia, New Zealand, and the Philippines, which have had the largest interest rate increases.

Despite these challenges, S&P Global's report predicts the fastest growth rates of around 6 per cent in India, Vietnam, and the Philippines, and expects growth in the Asia-Pacific region excluding China to pick up to 4.4 per cent in 2024 due to easier monetary conditions and slightly improved global growth.

Asian emerging market economies will remain among the fastest-growing ones globally through 2026. India, Vietnam, and the Philippines are expected to lead, with average growth rates of 6.7 per cent, 6.6 per cent, and 6.1 per cent, respectively, between 2023-2026, the report added.

ALCHEMPro News Desk (DP)