The IMF sees Asia, particularly Southeast Asia, as a bright spot, even as the global economy looks set to head into recession next year.
The International Monetary Fund stated in its latest outlook report, “Asia Sails Into Headwinds From Rate Hikes, War, and China Slowdown,” that while Asia has lost its strong economic rebound momentum due to three “formidable headwinds” — rising interest rates, the war in Ukraine, and the impact of China’s slowed economic activity — the region remains a relative bright spot in an increasingly gloomy global economy.
The Washington-based financial institution forecasts 4% growth in Asia and the Pacific this year and 4.3% growth in 2023, both of which are lower than the 5.5% average for the prior two decades.
Nonetheless, they are higher than the fund’s projections for Europe and the United States. The IMF forecasts 3.1% growth in 2022 and 0.5% growth in 2023 for the eurozone, and 1.6% growth this year and 1% growth next year for the US.
According to the fund, Southeast Asia is expected to have a strong year ahead, with Vietnam expanding from being at the center of supply chain diversification initiatives, and the Philippines, Indonesia, Malaysia, and India growing between 4% and 6%.
Tourism in Cambodia and Thailand will improve, said the IMF.
DBS Bank said that so far, the exports of the ASEAN-6 countries (Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam) have outperformed those of North Asia and the rest of the region, thanks to higher commodity prices and supply disruptions.