Asia Pacific is set to remain the fastest-growing region, led by major developing economies such as China, India and Indonesia. The region is set to benefit from economic reforms and transformation, strong manufacturing, exports and foreign investments, improving intraregional cooperation, as well as growing consumer bases and incomes. However, the near-term outlook is dimmed by weakening global demand, surging inflation, monetary tightening and spillover effects from China’s slowdown.
This report comes in PPT.
Driven by the relaxation of COVID-19 restrictions and robust global demand, economic growth in Asia Pacific has been on a recovery trajectory since 2021, albeit at a different pace across the region’s economies. The economic outlook, however, is increasingly clouded by the spillover effects of Russia’s invasion of Ukraine and continuing COVID-19 control policies in China, rapid monetary policy tightening across advanced economies and exchange rate depreciation.
China is set to remain the major driver of Asia Pacific economic growth in absolute terms, with its economy forecast to become the largest globally over the next decade. However, smaller developing economies in Asia Pacific, such as India, Indonesia, Bangladesh, the Philippines and Vietnam, also provide ample growth opportunities, driven by economic transformation and improving business environment, the trend of global supply chain diversification and expanding consumer bases.
While commodity exporters in Asia Pacific have benefited from surging commodity prices, exporters of manufactured goods are set to face notable challenges over the short to medium term as global consumer demand falters amid surging inflation and slowing economic growth.
Public finances of Asia Pacific economies are set to be adversely affected by weakening tax revenue amid decelerating growth momentum, as well as increasing government spending aimed to support economic activities and shield consumers from rising living costs. Moreover, developing economies in Asia Pacific are poised to witness local currency depreciation, financial instability and difficulties with balances of payments triggered by rapid monetary tightening across advanced global economies.
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