Countries in the Asia-Pacific region, led by emerging economies, are demonstrating resilience despite the economic challenges faced by China, according to the latest economic outlook from S&P Global Ratings.
The report emphasizes that economies outside of China have generally remained robust, with the Asia-Pacific region sustaining growth despite limited support from external sources.
China, a key player in the region, is grappling with a downturn in the property sector. However, the report indicates that growth momentum has “slightly improved” due to policy support measures. China has implemented various initiatives to bolster the property sector, which constitutes a significant portion of its economic output.
The Xi Jinping administration has also taken additional steps to revitalize the broader economy, including approving a $137 billion sovereign bond issue and allowing local governments to frontload part of their 2024 bond quotas. However, the report suggests that more measures may be necessary for China to overcome the economic downturn.
The forecast for China’s economic growth is 5.4% in 2023, with a projected decline to 4.6% in 2024, aligning with the International Monetary Fund’s predictions.
Despite the challenges in China, the Asia-Pacific region as a whole has demonstrated resilience. The region is expected to grow by 4.7% in 2023, slightly higher than the IMF’s forecast of 4.6% growth. In 2024, growth is anticipated to decline to 4.4%.
Emerging economies such as India, Indonesia, Malaysia, and the Philippines stand out due to strong domestic demand, making them stars in the region. India, in particular, is expected to continue growing at 6.4% in 2024, maintaining its position as the fastest-growing emerging economy in the region.
Developed economies like Japan, South Korea, and Taiwan have weathered the downturn well, supported by robust labor markets and service sectors. The semiconductor sector’s surge has been a significant catalyst for these developed economies and is expected to remain strong in the coming year.
However, the report notes that growth in the Asia-Pacific region will be the lowest among developed countries, influenced by weak global trade and high-interest rates.
While risks persist, including uncertainties related to China and Europe’s economic trajectories in 2024, unexpected increases in inflation in the United States, and geopolitical concerns, the report concludes on a positive note, stating that potential for growth remains in the region.
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