Global Economic Growth To Be Dominated By Asia-Pacific Region In 2023: S&P

Southeast Asia and India will benefit from trade diversification away from mainland China, according to S&P Global Market Intelligence report

The Asia-Pacific region is expected to dominate global economic growth in 2023, supported by regional free-trade agreements, efficient supply chains, and competitive costs, said S&P Global Market Intelligence, according to news agency ANI. "Southeast Asia and India will benefit from trade diversification away from mainland China," ANI report cited an S&P report released on Wednesday.

S&P also expects that the energy and mineral producing regions of the Middle East and Africa too will achieve moderate growth. Currently, the Asia-Pacific region produces 35 per cent of the world GDP, reported ANI.

Ongoing tightening financial conditions due to monetary policy tightening will tip the US economy into a "mild recession" starting in the fourth quarter of 2022 and extending through the second quarter of 2023, S&P Global Market Intelligence said, talking about the US. This month, it revised down US real GDP growth in 2023 from 0.9 to (-) 05 per cent.

"The initial recovery is sluggish, leading to real GDP growth of just 1.3 per cent in 2024. The recession will bring reversals in employment and industrial production, which posted solid gains through the third quarter of 2022. We project the US unemployment rate to rise from 3.5 per cent in September to 6.0 per cent at the end of 2023," report said.

About the ongoing global inflation, the report said that achieving inflation targets will be a multiyear process for the central banks. Although, there are possibilities for “significant progress” in 2023. 

Global consumer price inflation is projected to slow from 7.7 per cent in 2022 to 5.1 per cent in 2023 and 3.0 per cent in 2024, provided inflation in the advanced economies settles at 2.1 per cent, ANI report mentioned.

Averting an “outright recession”, global real GDP growth is projected to slow from 5.9 per cent in 2021 to 2.8 per cent in 2022 and 1.4 per cent in 2023, report said. Recessions now appear likely in European and North American economies that produce half of the global output in late 2022, and early 2023, the report further added.

"Global economic conditions continue to deteriorate as inflation remains uncomfortably high and financial market conditions tighten. The months ahead will likely bring recessions in Europe, the United States, Canada, and parts of Latin America. With moderate growth in Asia Pacific, the Middle East, and Africa, the world economy can avoid a downturn, but growth will be minimal," said Sara Johnson, executive director, Economic Research, S&P Global Market Intelligence.