Regional Economic Outlook for Asia and Pacific May 2023

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Overview

Despite weakening external demand and monetary tightening, domestic demand has so far remained strong, with China’s reopening providing fresh impetus.

Asia and the Pacific remains a dynamic region despite the somber backdrop of what looks to be shaping up as a challenging year for the world economy.

Global growth is poised to decelerate as rising interest rates and Russia’s war in Ukraine weigh on activity. Inflation remains stubbornly high, and banking strains in the United States and Europe have injected greater uncertainty into an already complex economic landscape.

Asia’s domestic demand has so far remained strong despite monetary tightening, while external appetite for technology products and other exports is weakening. We project the region will contribute around 70 percent of global growth this year as its expansion accelerates to 4.6 percent from 3.8 percent in last year.

China’s reopening will provide fresh momentum. Normally the strongest effect would be from demand for investment goods in China, but this time the biggest effect is from demand for consumption. Other emerging economies in the region are on track to enjoy solid growth, though in some cases at slightly lower rates than seen last year.