On Friday, the International Monetary Fund (IMF) lowered its economic projections for Asia due to a significant downturn in China’s economy, the conflict in Ukraine, and tightening monetary conditions worldwide.
The IMF stated in its Asia-Pacific regional economic outlook report that while inflation in Asia is still low relative to other regions, most central banks must keep hiking interest rates to keep inflation expectations from becoming unanchored.
The IMF has lowered its prediction for Asia’s growth from 6.5% (2021) to 4.0% this year and 4.3% in 2023.
‘Asia’s strong economic rebound early this year is losing momentum, with a weaker than expected second quarter,’ IMF’s Asia and Pacific Department director Krishna Srinivasan said in a statement.
‘As the effects of the pandemic wane, the region faces new headwinds from global financial tightening and an expected slowdown of external demand,’ the report said.
One of the major obstacles is China’s abrupt and widespread economic slump is attributed to rigorous Covid lockdowns and its escalating real estate problems. According to the research, ‘the sector’s access to market funding has grown increasingly challenging’ as more property developers have defaulted on their obligations in recent months.
China’s growth is predicted by the IMF to fall to 3.2% this year from 8.1% in 2021. According to the IMF, it will increase at 4.4% in 2019 and 4.5% in 2024.
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