International Monetary Fund: The Washington-based fund on Tuesday raised its forecast for the dynamic Asia-Pacific to grow by 4.6 percent this year from the 3.8 percent recorded in 2022. The International Monetary Fund said in its Regional Economic Outlook that India and China will play a role. Key role in driving global growth. In addition, the Asia-Pacific region is estimated to contribute about 70 percent of global growth.
“Asia and the Pacific will be the most dynamic of the world’s major regions in 2023, driven mainly by the bullish outlook for China and India,” the IMF report said. Notably, the two largest emerging market economies are predicted to contribute nearly half of global growth in 2023. The rest of Asia and the Pacific will contribute an additional fifth, the report said.
Asia’s dynamism will be primarily driven by resilient growth in India
It added, “Asia’s dynamism will be mainly driven by the recovery in China and resilient growth in India, while growth in the rest of Asia is expected to moderate in 2023 in line with other regions.”
The IMF further warned that 2023 could be a challenging year for the global economy due to the impact of the Russia-Ukraine war and monetary policy as global growth continues to decline. In addition, persistent inflationary pressures in the US and Europe, and more recently financial sector problems, are injecting additional uncertainty into an “already complex economic landscape”.
Silicon Valley Bank collapsed on March 10
Silicon Valley Bank, one of the most prominent lenders to the world of technology startups, which had been struggling, first collapsed on March 10 after depositors walked out on the bank. Its closure had a contagion effect and was later followed by other banks including First Republic Bank on Monday.
The collapse of some regional banks in the US, starting with Silicon Valley Bank, has sent ripples across the global banking industry and raised fears of the contagion’s impact on economies. Growth in the Asia Pacific region is also getting a fresh boost as China reopens its economy after extended COVID-related restrictions.
However, the IMF cautioned that this dynamic outlook does not mean that policy makers in the region can become complacent.
It added, “Monetary policy should remain tight until inflation is back within the target. The exceptions are China and Japan, where production is below capacity and inflation expectations remain muted.”
(With inputs from PTI)
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