Emerging Asian economies will face challenges in coping with a prolonged downturn in external demand in 2023. Exports are showing substantial contraction following the slump in external demand and continued downturn of global trade conditions. Robust private consumption will continue to drive economic growth in many ASEAN economies. The complete removal of travel restrictions is expected to stimulate rapid growth in the region’s tourism sector. The service sector is expanding, fuelling the region’s labour markets, though growth in merchandise exports declined. Deeper integration of export markets within Emerging Asia and sustained intraregional trade, however, helped the region cope with the impact of weak external demand on goods exports. Timely and appropriate monetary policies will support economic growth and tame inflationary pressures, while strong consumer confidence will continue to boost spending.
Risks and challenges persist, including global economic uncertainties, geopolitical risks, inflationary pressures, climate change and natural hazards. Weak external demand will continue to put pressure on the region’s exports. Emerging Asia’s financial markets will remain vulnerable to global financial market volatility and the monetary policy stance in advanced economies. Consumer price index (CPI) inflation is expected to stabilise in 2023, but elevated core inflation will pose a challenge in the region.
This Update presents Emerging Asia’s macroeconomic outlook for the remainder of the year. It then discusses the challenges and risks affecting economic growth in the region.