Asia could be a bright spot amid global downturn next year, economists say – CNBC

by | Oct 17, 2022 | Financial

Asia — especially Southeast Asia — remains a bright spot, even as the global economy looks set to head into recession next year, economists say. The strong economic rebound in Asia earlier this year has lost its momentum due to three “formidable headwinds” — that is, rising interest rates, the war in Ukraine and the impact of China’s subdued economic activity, the International Monetary Fund said last week. “Despite this, Asia remains a relative bright spot in an increasingly dimming global economy,” the IMF said in its latest outlook report “Asia Sails Into Headwinds From Rate Hikes, War, and China Slowdown.”The IMF predicted growth for Asia and the Pacific at 4% this year and 4.3% in 2023, with both below the 5.5% average over the last two decades. Still, they are higher than the fund’s forecasts for Europe and the U.S. The IMF is expecting growth of 3.1% in 2022 and 0.5% in 2023 for the euro area; and 1.6% growth this year and 1% next year for the U.S.China will recover a muted year and may post a 3.2% growth this year before accelerating to 4.4% next year assuming its Covid-zero policies are loosened gradually, the IMF says.Str | Afp | Getty ImagesOverall, Asia’s path will be different from many advanced economies such as Europe as it serves as a “useful diversifier that is insulated to a degree from the struggles facing Europe,” Fidelity’s Portfolio Manager Taosha Wang said in a note last week.”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,” Wang said.Southeast Asia’s strong recoverySoutheast Asia will likel …

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