Asia To Grow By 4.6 Per Cent In 2023 Driven By China's Recovery And India’s 'Resilient Growth': IMF

Asia-Pacific region's growth is predicted to increase to 4.6 per cent in 2023. In India growth is expected to moderate slightly from 6.8 per cent in 2022 to 5.9 per cent this year

India's growth momentum will begin to slow as softening domestic demand offsets strong external services demand; growth is expected to moderate slightly from 6.8 per cent in 2022 to 5.9 per cent this year, said IMF.

The International Monetary Fund's (IMF's) latest report on Tuesday said that driven by the recovery in China and 'resilient growth' in India, the Asia-Pacific region's growth is predicted to increase to 4.6 per cent in 2023 from the 3.8 per cent growth recorded in 2022. The 2nd edition of 'Regional Economic Outlook – Asia and Pacific' released on May 2 said that the region would contribute around 70 per cent of global growth. 

IMF report said, "Growth in Asia and the Pacific is projected to increase this year to 4.6 per cent, from 3.8 per cent in 2022, an upgrade of 0.3 per cent relative to the October 2022 World Economic Outlook. This means the region would contribute around 70 per cent of global growth. Asia’s dynamism will be driven primarily by the recovery in China and resilient growth in India, while growth in the rest of Asia is expected to bottom out in 2023, in line with other regions."

The report noted that in China, the economy is expected to expand by 5.2 per cent in 2023, as the rapid economic reopening generates a strong recovery in private consumption.

On the other hand, in India growth momentum will begin to slow as softening domestic demand offsets strong external services demand; growth is expected to moderate slightly from 6.8 per cent in 2022 to 5.9 per cent this year. 

However, the report noted that this does not mean the Asian economies should become complacent since the risks to the outlook are predominantly on the downside.

"Headline inflation has been easing, but remains above targets in most countries, while core inflation has proven to be sticky," IMF said. 

“The pressures from diminished global demand will weigh on the outlook,” the report added. 

According to the report, although spillovers from turmoil in the European and US banking sectors have been limited thus far, vulnerabilities to global financial tightening and volatile market conditions, especially in the corporate and household sectors, remain elevated.

"The main development has been the reopening of China, where surging consumption is boosting growth across the region despite weaker demand from the rest of the world," the agency said.

According to IMF forecast, the US economy is anticipated to grow by 1.6 per cent in 2023 and 1.1 per cent in 2024. The global economy, on the other hand, is set to grow by 2.8 per cent in 2023 and 3 per cent in 2024. In 2022, the global economy is expected to experience a growth rate of 3.4 per cent.

"In the longer term, the Chinese economy which has been the primary engine of regional and global growth for decades is expected to slow considerably in the face of unfavourable demographics and a productivity slowdown. The region should prioritize structural reforms to boost long-term growth, including through innovation and digitalization, while accelerating the green energy transition," IMF added.