Asia-Pacific can ‘feel good’ about 2023 growth outlook despite inflation, geopolitical risks, IMF official says
- Krishna Srinivasan of the IMF says Thailand, Laos and Cambodia are likely to benefit the most from China’s travel reopening
- Asia’s economy set to expand 4.6 per cent this year, with China and India the key drivers of growth, according to IMF’s recent regional report
Asia-Pacific countries have ample reasons to “feel good” about growth prospects this year even as the world economy is beset with risks ranging from inflation to geopolitics-fuelled fragmentation, the IMF’s top Asia official has said.
“When the rest of the world is not doing so well and you are growing at 4.6 per cent, you should feel good,” Srinivasan said in Hong Kong on the sidelines of the IMF’s launch of its biannual regional outlook report.
Srinivasan acknowledged that questions remained on whether “strong external headwinds” arising out of the United States and Europe could hamper Asia’s prospects. But he also noted that Asia’s exports within the region were around 50 per cent.
“So if inflation is brought under control … the impetus from domestic demand will be there,” Srinivasan said. “It could be a good offset to sluggish demand from US and Europe. So the combination of good impetus from China with robust domestic demand should provide a floor for these countries in terms of growth.”
The IMF report released on Tuesday said China’s rapid reopening in recent months following nearly three years of harsh pandemic lockdowns would have spillovers on Asia’s consumption and service sectors.
“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 report said.
Asia’s economy was expected to expand 4.6 per cent this year after a 3.8 per cent increase in 2022, contributing around 70 per cent of global growth, the IMF said, upgrading its forecast by 0.3 of a percentage point from October.
