The ominous clouds of global economic recession are getting thicker and deeper, irrespective of the shape and size of individual economies. Amid all that gloom, Asian economies, particularly Southeast Asia, remain a bright spot with hope and humour for the next year.
Most economists say that the global economy looks set to head into recession next year. The impact is likely to be widespread and irrespective of the fact it is being developed, developing or least developed.
Earlier at the beginning of this year, the strong economic rebound in Asia lost its momentum due to major headwinds like the firming up of interest rates across the globe, slowing down of economic activity in China (the second largest economy) and the Russia-Ukraine war in, said the International Monetary Fund recently.
“Despite all these, Asia remains a relative bright spot in an increasingly dimming global economy,” the IMF said in its latest outlook report “Asia sails into headwinds from rate hikes, war, and China slowdown”, released recently.
Among ASEAN economies, Vietnam is expanding from being at the centre of supply chain diversification efforts, while the Philippines, Indonesia, Malaysia and India will likely grow between 4 percent and 6 percent.
For Indonesia, Malaysia, the Philippines, Thailand and Vietnam, the growth forecast for 2023 was revised to 4.9 percent from 5.1 percent previously. The group’s 2022 growth was left unchanged at 5.3 percent, up from the actual growth of 3.4 percent last year.
The tourism sector in Cambodia and Thailand is showing a strengthening of the trend and promises to perform better than expected, the IMF said and added, the two ASEAN member states will expand faster in 2023 on an expected strong increase in foreign tourism flow.
Till now, exports from the ASEAN member states — Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam — have outperformed North Asia and the rest of the region, according to DBS Bank. Higher commodity prices and supply disruptions helped exporters such as Indonesia.
Manufacturing purchasing managers indexes (PMIs) in Indonesia, the Philippines, Thailand, and Vietnam “broadly stood in the expansionary zone of above 50 in September,” DBS analysts Chua Han Teng and Daisy Sharma said in a note. That puts these countries higher than countries like South Korea and Taiwan.
The IMF predicted growth for Asia and the Pacific at 4 percent this year and 4.3 percent in 2023, with both below the 5.5 percent average over the last two decades. Compared with the brightness of hopes for Asia and Pacific, and in eurozone, the IMF is projecting a growth of 3.1 percent this year (2022) and a flicker of 0.5 percent growth in 2023.
In the case of the USA, the top and the strongest global economy, the IMF is expecting growth of 1.6 percent and 1 percent in 2022 and 2023, respectively.
As for China, the second strongest and largest economy, the global monetary fund is expecting a recovery this year at 3.2 percent and further strengthening to 4.4 percent next year (2023) assuming its Covid-zero policies are eased gradually.
Overall, Asia’s path will be different from many advanced economies such as Europe as it serves as a “useful diversifier that is insulated to a degree from the struggles facing Europe,” Fidelity’s Portfolio Manager Taosha Wang said in a note last week.
“This implies more headroom for growth-oriented policies in the region, which differs from many other parts of the world where high inflation is forcing central banks to tighten financial conditions,” Fidelity’s Portfolio Manager said in his note.
However, Covid has been very unpredictable so far. Its impact on the global economy has been devastating. Experts have started talking loudly that the pandemic may leave the world economy more shattered and devastated than the 2008 global meltdown and may also take longer to recover.
Source: Khmer Times