Predictions for global economic growth by the International Monetary Fund (IMF), released biannually, has revealed a downward course. The World Economic Outlook (WEO) report that the IMF released in October 2022 showed that global growth for 2023 will only be 2.7%, a staggering number compared to the 3.2% growth in 2022, and the 6% growth in 2021. Despite all this though, the report shows that Southeast Asia’s growth remains to be on an upward trend, especially considering other advanced economies’ low predictions for 2023.
“Asia remains a relative bright spot in an increasingly dimming global economy,” according to IMF. “Asia sails into headwinds from rate hikes, war, and China slowdown.”
The IMF reported that Asia and the Pacific’s gross domestic product (GDP) growth for 2023 is at 4.3%, above the forecasted 4% this 2022. While these countries’ growth has collectively decreased compared to the 6.5% growth in 2021, it’s a stable number compared to the downward predictions for other nations like those that are a part of advanced economies and eurozones.
While eurozones showed a high 5.2% GDP growth in 2021, it drastically decreased in 2022 at 3.1%, and furthermore at the forecasted 0.5% in 2023. On the other hand, the prediction for advanced economies in 2023 is only at 1.1%, lower than the 2.4% growth in 2022.
On the bright side amid these gloomy forecasts, Southeast Asia’s projections are on a positive trend since it outperforms even North Asia. In particular, Vietnam, Malaysia, Indonesia, Philippines, and Thailand show high numbers between 4% to 6% in 2023. According to the report conducted by DBS Bank, the exports from Southeast Asian countries have taken the lead compared to North Asian countries.
The tourism sector, alongside foreign direct investment and merchandise exports, in Cambodia and Thailand will help accelerate their economic growth, according to the IMF. While the 2023 GDP projection for Thailand is at 3.7%, Cambodia’s economy looks positively bright at 6.2%. This is more so since there has been numerous foreign direct investments in Cambodia in sectors like real estate, and it’s only expected to increase moving forward.
To make it easier, check out the brief overview of IMF’s forecasted growth for 2023:
- Asia and the Pacific → 4.3%
- Emerging and Developing Asia → 4.9%
- Cambodia → 6.2%
- Advanced Economies → 1.1%
- Global prediction → 2.7%
Global economy has been affected by numerous challenges like inflation, Russian-Ukraine war, lockdowns and COVID-19 restrictions in China, and collective financial restrictions. On this note though, while it might take longer for countries to recover from the impact of the global pandemic, Asia’s economy has not been as affected compared to the struggles of those in the Eurozone.
According to the Portfolio Manager of Fidelity Bank, Taosha Wang, “This implies more headroom for growth-oriented policies in the region, which differs from many other parts of the world where high inflation is forcing central banks to tighten financial conditions.”
In this regard, while there has been an overall downward trend in economic growth, Southeast Asia has more room to recover quickly, as proven by the IMF forecast.