Morgan Stanley Says Asia Inflation Has Peaked, Growth to Outperform Western

Morgan Stanley saw inflation in Asia  has reached its peak and that the region’s growth is on track to overtake the U.S. and Europe by the end of this year, as Asia was less affected by rate shocks than its western peers.

In a webinar on Tuesday, the investment bank’s Chief Asia Economist Chetan Ahya projected that Asia would have stronger growth rates than Western countries this year. Three of Asia’s largest economies; India, Indonesia, and Japan, are also seeing healthy domestic demand, and there is hope that China’s recovery will begin in the second half of this year.

“By the fourth quarter of this year, we think Asia’s growth will be outperforming the U.S. and Europe by about 450 basis points,” said Ahya.

Despite both economies experiencing the same inflationary crisis, there are slight differences with Asia’s inflation being ‘not as intense’ as in the United States and Europe due to the missing an interest rate shock.

Inflation in Asia has been almost half the rate of inflation in the other two areas.

“Asia’s inflation problem has not been as intense. And we think that region’s inflation has peaked,” he said. “By the time we are in September [or] October, 80% of [the] region’s countries would have seen inflation going back into central banks’ comfort zone.”