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Deteriorating global economic conditions are weighing on the region’s outlook, but China’s reopening last December should provide some counterbalance, as per AMRO.
ASEAN+3 region’s short-term growth forecast for 2022 has been revised to 3.3 per cent, down from the 3.7 per cent growth forecast in October 2022, according to the ASEAN+3 Macroeconomic Research Office (AMRO). This is mainly because of continuing weakness in Plus-3 economies, especially China where growth has turned out to be much weaker.
Growth in the ASEAN region, buoyed by strong domestic demand, is revised upwards to 5.6 per cent. This year, growth in the ASEAN+3 region is projected to strengthen to 4.3 per cent, as China’s economy is expected to rebound strongly reflecting the removal of containment measures and reopening of its economy. Inflation is anticipated to come down to 4.5 per cent in 2023 from the projected 6.3 per cent spike last year.
The weakening global environment has taken the wind out of the sails of the region’s external trade momentum. The drag on economic activity from aggressive monetary policy tightening in the US and euro area will be felt more fully this year, translating to softer export orders for the ASEAN+3 region.
Inflation is moderating across ASEAN+3, tempered by sustained policy tightening by central banks and easing global supply chain bottlenecks. Oil prices have reverted to almost pre-pandemic levels, reflecting weaker global demand. Prices of key agricultural commodities—although remaining relatively high due to the prolonged war in Ukraine—have fallen from their peaks in 2022.
“With recession risks still haunting the US and Europe, China’s economic reopening cannot come at a better time for the region,” said AMRO chief economist, Hoe Ee Khor. “China’s stronger economy will provide support for regional activity while the border reopening will boost intraregional tourism.”
Fibre2Fashion News Desk (DP)
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