Nov 13, 2023 - Economy & Business

Asia fuels global growth but its projected growth appears dim

Projected GDP growth rate for select economies
Data: IMF; Chart: Deena Zaidi/Axios Visuals

Much like in the U.S., vigorous consumer spending boosted growth in Asia's top three economies this year — namely China, Japan and India.

Driving the news: The region's strategic importance to the U.S. has been highlighted by ongoing tensions with Beijing, which will play out this week against the backdrop of the Asia Pacific Economic Cooperation (APEC) summit in San Francisco, where top officials will congregate.

Why it matters: Asia in general, and non-China economies in particular, are a policy focus for the Biden administration, which is seeking to deepen ties and diversify U.S. supply chains.

The region has been a relative "bright spot" amid the global economy's rocky recovery during the pandemic. But a recent report by the International Monetary Fund (IMF) warns that the region's recovery might quickly lose steam.

  • It is set to contribute about two-thirds of all global growth in 2023, but the growth is significantly lower than projected before the pandemic, according to the fund.

By the numbers: IMF staff estimates Asia-Pacific to remain the most dynamic region this year, with growth to 4.6 percent this year from 3.9 percent in 2022.

  • While China and India are projected to jointly contribute about half of world growth in both 2023 and 2024, the IMF projects a slow growth of 4.2 percent for the region for next year.
  • This "less optimistic" assessment is based on the slowdown of the global economy and lagging investment in the third quarter.

Zoom out: Disinflation, which has taken hold in the U.S., is also playing out in Asia. With the exception of Japan, inflation is expected to return to central bank target ranges next year in most countries.

  • "This process is well ahead of most other regions, where inflation remains high and is expected to fall within target only in 2025," the IMF adds.

Go deeper: APEC's coming to San Francisco. Here's what to expect

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