Sri Lanka is an extreme case where the run up in debt became unsustainable and the economy lost access to global capital markets, leading to a default on its external obligations.įurthermore, increased trade policy uncertainty and a fraying of supply chains, which contribute to the trend toward geoeconomic fragmentation, is expected to delay the economic recovery and exacerbate scarring from the pandemic in Asia-one of the biggest beneficiaries of decades of deepening global trade and financial integration. Outflows have also occurred from some advanced Asian economies such as Korea and Taiwan Province of China, as the Fed signals continued rate hikes and geopolitical tensions reverberate.Īsia’s share of total global debt has increased from 25 percent before the global financial crisis to 38 percent post-COVID, raising the region’s susceptibility to changes in global financial conditions. The outflows have been especially large for India: $23 billion since Russia’s invasion of Ukraine. Most emerging market economies in Asia, excluding China, have experienced capital outflows comparable to those in 2013, when the Federal Reserve hinted it might taper bond buying sooner than previously expected, causing global bond yields to rise sharply. ![]() The resilience of manufacturing and rebound in tourism is supporting a gradual rebound in Malaysia, Thailand and the Pacific island countries. Japan and Korea, the two largest regional economies integrated closely with global supply chains and China, will also see growth slow on weaker external demand and disruptions to supply chains.īut despite China’s recent slowdown, signs of a rebound in economic activity are emerging as some pandemic restrictions on mobility are now being gradually eased. Such a decline in activity, which also reflects a prolonged and intensifying slump in the real estate sector, is likely to have sizeable spillovers on regional trading partners. Accordingly, our full-year growth forecast is lowered to 3.3 percent from 4.4 percent in April, and we expect 4.6 percent growth next year, a reduction of 0.5 percentage points. That in turn is compounding the regional growth spillovers from China’s slowdown.Ĭhina, Asia’s largest economy, saw a significant deceleration in the second quarter as the zero-COVID policy prompted lockdowns for major cities and supply-chain hubs. Risks that we highlighted in our April forecast-including tightening financial conditions associated with rising central bank interest rates in the United States and commodity prices surging because of the war in Ukraine-are materializing. We lowered our 2023 forecast to 4.6 percent, down by 0.5 percentage points. The global economic outlook has darkened, and growth across Asia and the Pacific is poised to slow further amid the continuing impact of Russia’s invasion of Ukraine and other shocks.Įconomic growth in Asia and the Pacific is projected to decelerate to 4.2 percent this year, 0.7 percentage points less than we forecasted in April and slower than the 6.5 percent growth in 2021.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |