INSIGHTS
The Asia-Pacific region is expected to contribute over 70 per cent of global growth in 2023, as per the IMF.
However, policymakers must remain vigilant as risks to the economy still exist, such as public debt and inflation.
Prioritising policy initiatives that foster innovation-driven economic development can ensure sustainable and long-lasting growth.
Asia and the Pacific are expected to remain a dynamic region despite the challenges faced by the world economy, as per the International Monetary Fund (IMF). The region is projected to contribute more than 70 per cent of global growth this year, with its expansion expected to accelerate to 4.6 per cent from 3.8 per cent in 2022. China’s reopening is set to provide fresh momentum, with the demand for consumption having the biggest impact. Solid growth is expected to be enjoyed by other emerging economies in the region as well.
However, despite the positive outlook, policymakers cannot afford to be complacent. There are still risks to contend with, such as public debt and the persistent challenge of inflation. While global commodity prices have moderated after surging last year and supply chain pressures have eased, inflation remains stubbornly high, and core inflation, which excludes food and energy, has also proven sticky, according to an IMF blog by Krishna Srinivasan and Alasdair Scott.
Asian economies have either already closed or are narrowing their output gaps. Output gaps are indicators of how closely demand is keeping up with the capacity to meet demand, and they also reflect the pressure on prices. This means that the battle to contain inflation is not over, and central banks may need to keep interest rates higher for longer, the authors said.
Read more about Asia & Pacific to drive over 70% global growth in 2023: IMF
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