Southeast Asia remains a bright spot, even as the global economy looks set to head into recession next year, according to economists.
Rising interest rates, the war in Ukraine and the impact of China’s zero-Covid policy are the three “formidable headwinds” that cause the momentum in the economic rebound in Asia earlier this year to slow.
“Despite this, Asia remains a relative bright spot in an increasingly dimming global economy,” the statement made by IMF in its latest outlook report.
The IMF predicted growth for Asia and the Pacific at 4% this year and 4.3% in 2023, with both below the 5.5% average over the last two decades. The latest outlook report published by IMF, “Asia Sails Into Headwinds From Rate Hikes, War, and China Slowdown.”
Meanwhile, the IMF is anticipating growth of 3.1% in 2022 and 0.5% in 2023 for the euro area; and 1.6% growth this year and 1% next year for the U.S.
Overall, Asia would have a higher economic growth as 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.
According to IMF, Vietnam is expanding from being at the center of supply chain diversification efforts while the Philippines, Indonesia, Malaysia and India will likely grow between 4% and 6%.
Tourism in Cambodia and Thailand will pick up.
Exports from the ASEAN countries like Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam have outperformed North Asia and the rest of the region. Higher commodity prices and supply disruptions helped exporters such as Indonesia.
Manufacturing purchasing managers indexes in Indonesia, Philippines, Thailand, and Vietnam “broadly stood in the expansionary zone of above 50 in September. That puts these countries higher than countries like South Korea and Taiwan.
