The International Monetary Fund (IMF) increased its outlook for Asia’s economy, crediting China’s economic rebound for boosting growth.
The IMF also cautioned about potential risks arising from ongoing inflation and global market instability tied to issues in the Western banking sector.
The IMF emphasized the importance of China’s economic reopening for the region, with expected spillover effects on Asia primarily driven by consumer and service demands rather than investment.
According to the IMF’s regional economic outlook report, Asia and the Pacific will be the most dynamic among the world’s primary regions in 2023, with China and India being the primary growth engines.
Domestic demand is projected to remain the main growth driver for Asia in 2023, in line with global trends.
The IMF anticipates that Asia’s economy will grow by 4.6% this year, up from 3.8% in 2022, contributing about 70% of global growth. This represents a 0.3 percentage point increase from the October forecast.
The report suggests that China and India will play significant roles, with growth rates of 5.2% and 5.9%, respectively, but growth in the rest of Asia is also expected to stabilize this year.
However, the IMF reduced its forecast for Asia’s growth in 2024 by 0.2 percentage points to 4.4% and highlighted risks to the outlook, including higher-than-expected inflation, weak global demand, and the effects of banking stress in the US and Europe.
